§ Order for Second Reading read.
§ 11.19 a.m.
§ Mr. W. S. Hilton (Bethnal Green)
I beg to move, That the Bill be now read a Second time.
Before I deal with its provisions, I should like to thank my hon. Friends who have acted as sponsors and those who have attended today to support me, and I am also indebted to hon. Members on the Conservative benches who have mended, undoubtedly to welcome the terms of the Bill.
It is necessary to explain why a Bill of this kind has to be introduced. Some of my hon. Friends and some hon. Members opposite have asked whether such powers are necessary and whether local authorities cannot already carry out the functions envisaged in the Bill. The doctrine ofultra vires,however, applies to local authorities. While I do not claim this to be a very legal definition of the doctrine, I would explain briefly that it means that local authorities may only carry out those functions and activities which they are given specific authority to carry out by legislation. If a function or activity is not specified by legislation, they cannot carry out that function or activity. This has placed local authorities in the rather peculiar situation that legislation gives them the right individually to carry out certain functions but not in co-operation with one another.
If we are to talk about economies of scale and the value this has for private industry. we must apply it over every sector of the economy, public or private, where it is likely to be of value to that sector and ultimately to the economy as a whole.
The doctrine ofultra vireshas placed local authorities in a very peculiar posit on which might best be illustrated by drawing an analogy with private retail distribution. It is as though Woolworth's or Marks and Spencer each with perhaps 1,000 individual shops had by law to purchase individually for each one, with the result that neither firm could obtain 786 the benefits of bulk purchasing or the pooling of services. The reason for the Bill is, therefore, that it would allow local authorities to come together and achieve great economies and efficiency in jointly providing services which, at the moment, it is lawful for them to provide individually.
The fact that local authorities cannot now simply get together and form consortia for this purpose is shown by the number of private Bills submitted by local authorities to Parliament in order to achieve the ends I have mentioned. The House generally looks with favour upon this kind of legislation. We do not often turn away a local authority, refusing to give it the kind of powers it requests. My Bill deals specifically with goods and services and these matters have already been dealt with in Private Bills sponsored by local authorities. Clause 1 is a rather big kernel in a small nut. It sets out the functions I would like the local authorities to have on a permissive basis. Clause I(1,a) refers tothe supply by the authority to the body of any goods or materials;This is perfectly justified. They can do this for their own individual requirements and I do not see why we should not allow collective powers to provide these services. Clause 1(1,b) deals withthe provision by the authority for the body of any administrative, professional or technical services; ".Related to that is (c), which deals with the staffs which may be required to man these services. Finally, (d) deals with works and maintenance.
Rather illogically, as some may think, in Clause 1(2), found in a piece of what I call permissive legislation, I am putting a non-permissive item in relation to new building. I shall return to that point later but for the moment I want to comment on the admiration which some of my hon. Friends have expressed for my ability in putting, in other subsections, all the cross-references and references to other Acts. I must modestly decline these compliments. I am indebted for guidance to officials of the Ministry of Housing and Local Government, who have helped considerably and I therefore submit to hon. Members that, since the Ministry has had a hand in compiling these provisions, they can accept that they are accurate.
787 The Bill is entirely permissive. We often get accused of trying to compel people to do something but there is no compulsion here. The Bill will simply allow local authorities to come together on a permissive basis to achieve the objectives allowed in Clause 1. If it is thought that I am trying to establish a political precedent, then I have no objection but I must point out that political precedent in this context was established by the Conservative Government in the London Government Act, 1963, and any hon. Members opposite who were present at the time will recall that Sections 5 and 72 of the Act bear a striking similarity to the points I include in Clause 1 of my Bill.
I have done this deliberately. I am seeking to achieve for all local authorities the very best of permissive legislation which already exists either in private Acts local authorities have sponsored or in the London Government Act, which was sponsored by the Conservative Government.
The Bill covers England, Wales and Scotland. I know that sometimes there is opposition from some parts of the House to any hon. Member who attempts to cover a country he is not directly linked with. As an Englishman with a Scots accent, I hope that I can get away with covering England and Scotland, and Wales is included because I know that, in all these areas, local authorities have been concerned with the problem. In any event I do not believe that we should try and justify legislation by blood relationships. If it is going to be good for England and Wales, it should be good for Scotland or any other area.
In substantiation of what I have said about local authority interest in this matter and perhaps to quell some of the apprehensions which may be held on the benches opposite, I have written to all the associations concerned with local Government bodies. I shall quote from three of the main bodies from whom I have received replies. On 12th December, the Secretary of the Association of Municipal Corporations wrote to me:The Bill which you have introduced seems to follow the lines agreed with the Ministry of Housing and Local Government and I am happy to be able to assure you that what is proposed has this Association's full support.788 Also on 12th December the Secretary of the County Councils Association wrote:…I write to confirm that the Association wish to express their support for the above Bill.…The Association welcome the prospect of clarifying the powers of local authorities so as to enable them to co-operate in purchasing and supplies matters and in the provision of management and other associated services ".Finally, the Secretary of the Rural District Councils Association wrote on 14th December:The Association welcomes the Bill and believe it will be helpful to rural districts.To any hon. Member who may still have apprehensions, I would say that a great amount of work has already gone into research on this subject. I am not referring to my humble efforts but to the efforts of local government associations, private manufacturers and economic development committees for industry. If the Bill were killed, it might mean for some time the end of those efforts. As the local government Associations welcome the Bill, and as it would be welcomed by others, I hope that, even if there are reservations among hon. Members, they will allow it a Second reading. We can discuss in Committee any matters about which they have fears.
What benefits do local authorities see arising out of this Bill? My hon. Friend the Member for Buckingham (Mr. Maxwell) recently produced what I thought was an extremely good survey of public sector purchasing. [HON. MEMBERS: Where is he?] I imagine that other business is keeping him away. I take it that, in his absence, I may use a quotation from his excellent survey of public sector purchasing. From the statistics, he found that, for goods and services, with which the Bill is concerned, the cost to local authorities at present is £3,000 million per annum.
If by the methods foreseen in the Bill we could achieve the kind of cost reduction which hon. Members opposite would expect to achieve in a private business—a reduction of 5 per cent.—this would be an annual saving to local authorities of £150 million. While I do not claim that the Bill would affect the whole of that expenditure, nevertheless there could be substantial cost reductions and the ratepayers, who are always the first concern of most parties, would benefit. 789 If that were the only result of the Bill it would be interesting enough, but that would not be the only saving if the Bill were passed.
§ Colonel Sir Harwood Harrison (Eye)
Has the hon. Gentleman studied the bulk buying by the Ministry of Defence and the Service Departments and seen how much is "flogged" at very cheap prices?
§ Mr. Hilton
I am sure that the hon. and gallant Gentleman does not expect me to defend any Ministry. I may find it very hard to defend my own Bill.
In our economic discussions, which lately have been frequent, it is said that Great Britain has too small an economy to allow us fully to exploit any invention Dr new technique, that we do not compare with America or Russia or the Common Market countries. That is true, but industrialists know that even within the relatively limited economy of this country there could be better markets and better scope for exploitation of inventions and new techniques if we had organisation of demand. There is the constant plea that we should have organisation of demand to allow industrialists forward planning and other beneficial consequences.
We will never achieve any major organisation of demand in the private sector however. It can be achieved only in the public sector and there would be a fall-out benefit to private industry. If local authorities indulged in bulk purchasing on a wide scale they could give manufacturers forward planning orders and suggest their own ideas about the kind of commodities which they should produce—a two-way fertilisation of ideas, for local authorities must have their own ideas about what should be produced to meet their requirements—and in that way industry would certainly benefit from the Bill.
It is said that Britain is entering the computer age and that the limitation of the market is a possible obstruction to development of computer techniques as freely as in America or in Russia. But local authorities and other public bodies of all kinds are now using computers or hiring time on computers belonging to others. Clause 1, which would allow them to exchange services, would permit local authorities or a local authority to buy a computer and hire time on it to other authorities. Perhaps they could 790 develop programming and other developments arising from the specific use of computers in local authority work and this would help achieve greater efficiency in this respect.
§ Mr. A. P. Costain (Folkestone and Hythe)
As the Post Office is to provide this facility for the whole nation, why should not local authorities use it instead of having computers of their own?
§ Mr. Hilton
I think that the hon. Gentleman misunderstands the Bill. I explained earlier that the kind of powers which he is suggesting do not exist, to the best of my knowledge and the knowledge of those authorities which have written to me. The Bill is to empower them to do this.
§ Mr. Costain
I think that the hon. Gentleman will find that it is perfectly in order for one local authority to share its computer services with another local authority now.
§ Mr. Hilton
That shows the doubt on this subject. Some local authorities have said that it is not permitted. There has been confusion among those who have written to me. I have sought the best legal advice and I have been told that the doctrine ofultra viresmeans that where one would normally expect that one could do anything unless it were proscribed by law, local authorities cannot do anything unless it is prescribed by law.
I am not too starry eyed about the Bill and I know the limitations of what can be accomplished by a Private Member's Bill and I am not claiming the rewards to be greater than they are. Because I appreciate the limitations upon me and the possible fears and doubts of hon. Members opposite, the Bill does not cover productive functions. That is why Clause 1(2) prohibits local authorities from new building activities, which would be a productive function.
This has been provided deliberately because of the fears expressed to me that the Bill could be used to cover new building work. I have been driven to the illogicality of putting a non-permissive Clause in permissive legislation. It might otherwise have been said that the Bill would be used for public ownership not only by the back door, but by the side door and by the front door. I am not particularly appalled by that prospect and 791 I shall not pretend that I would shiver with horror, but I realise that a Private Member's Bill is not necesarily the vehicle for achieving the long-term objectives which my hon. Friends and I may have. However the builders' lobby is rather more strenuous than are certain other manufacturing lobbies, but I hope they take note of Clause 1(2). There are nevertheless benefits to be obtained by the building industry, in which I have been engaged for a long time. In the supply of materials, for instance, it is well known that organisation of demand and standardisation of design could lead to great cost savings for the benefit of the industry and those who produce these products. The economic development committees for the construction industries have recently had two committees set up specifically to inquire into builders' joinery and ceramic sanitaryware and to find out what greater production runs could mean. Those two committees independently came to one similar and important conclusion and I quote from the report of that dealing with ceramic sanitaryware which said:We consider that it is particularly difficult to achieve variety reduction in the private sector. Progress can best be made in the public sector.The builder's joinery committee said that if there were longer production runs as much as 8 per cent. could be saved on manufactured doors and up to 13 per cent. on manufactured staircases, a considerable saving for the construction industry, and both sides of the House are concerned with increases in building costs.
There is an even better case with ceramic sanitary ware. It has also occurred to the construction industries that the terrific variety of design in ceramic sanitary ware is not justified by different designs in the human anatomy and it suggests that there should be some reduction in design and variety of colours and so on of this type of sanitary ware. It is said that if public authority demand could be organised considerable savings could be made in the cost of the individual items now produced. Secondly, there would be savings to manufacturers in space and in storage and also in capital requirements because they would not have to store so many items. As builders in the House know, the next stage is the 792 builders' merchant where there would be a reduction in variety of design, and the builders' merchant would gain from the same cost reduction which the manufacturer would have.
The greatest saving would be that of manpower. In Great Britain 45 to 50 per cent. of all plumbers are occupied on repair and maintenance. They have to deal with a wide variety of fitments which does not allow them to become extremely productive.
If one could have a reduction in the designs of sanitary ware of all types then plumbers would find that installation, and repair and maintenance costs would be reduced. The reason why I have quoted ceramic sanitary ware is that the United Kingdom is a major exporter of such ware. If we could achieve a cost reduction, through organisation of public demand, this would help our export markets. I have dealt with building because there are more apprehensions about this than other areas. In the £3,000 million that it costs local authorities to administer goods and services building and materials are by no means the only matters.
§ Mr. James Ramsden (Harrogate)
I see the force of what the hon. Gentleman says, but I was under the impression that, from the point of view of being able to get together in order to prepare specifications for the supply and contracting of the kind of goods the hon. Gentleman is talking about, local authorities already had the necessary power but were failing to use it.
§ Mr. Hilton
Local authorities do not have the necessary powers such as are envisaged in this Bill. The right hon. Gentleman is probably referring to an earlier Act, giving them the right to set up committees. The right to set up these committees would mean that if one local authority wanted to purchase six typewriters from another it would have to go through the whole rigmarole envisaged in that legislation where as under this Bill it would be able to say to a local authority: "When you are buying typewriters, buy six for us." If one wants efficiency, if one wants less of this red tape, this is the Bill which will bring it about.
§ Mr. Stephen Hastings (Mid-Bedfordshire) rose—793
§ Mr. Hilton
No I will not give way. There are many others with Bills and I ought to try to conclude my speech. While I am trying to appease the agitated minds of hon. Members worried about the building industry, I must emphasise that it is such things as oil, educational requirements, vehicles, plant, motorcars and so on which are the largest purchases involved. In all these items that I have enumerated the same cost reductions and effectiveness in the private sector can be obtained if we make the public sector produce more efficiently.
This is surely the right time to introduce a Bill of this kind. This is the economic climate in which we should be seeking to do everything to bring about a greater efficiency, allied to cuts in expenditure. I appeal to the House to give a Second Reading to a Bill which will not only assist this primary objective but which could prove very beneficial to the ratepayers, the local authorities and the public and private sectors.
§ Mr. Speaker
Order. Before I call on any hon. or right hon. Gentleman, the House will notice that there are quite a number of hon. and right hon. Gentlemen seeking to catch my eye. How many are called depends on the length of speeches.
§ 11.45 a.m.
§ Mr. W. F. Deedes (Ashford)
The hon. Member for Bethnal Green (Mr. Hilton) has moved his Bill with much persuasion, and in a very considered fashion. Notwithstanding his opening remarks I am not sure whether this is an ideal subject for a Private Member's Bill. The implications for the distributive system in the construction industry are enormous. While that may not trouble the hon. Gentleman, who is obviously very sincere, it is something which should give the House occasion for pause.
The hon. Member mentioned some figures which I am sure he would admit are somewhat broadly based. It is true that about £3,000 million is involved in this sector of the construction industry, and that if a saving of 5 per cent. were effected about £150 million would result. It is sometimes very easy to assert in a general way that by the elimination of one or more stages in the distribution system a sum of money will be saved. I recall that a number of hon. and right 794 hon. Gentlemen opposite held this view about the horticultural industry. It was suggested that, with the profits and markup associated with the middle-men once removed, there would be a great reduction in price for the housewife. This idea did not persuade me and it never came to anything.
Similarly, the idea that local authorities, by eliminating certain channels, will be able to save, is something requiring very close scrutiny. The experience of some co-operative societies suggests that this may be less simple than it sounds. My main question is: how are these local authorities to organise themselves and to have adequate staff for this sort of operation? The hon. Gentleman referred to computers. We are all aware that these may offer quite surprising developments in such distribution, but we are not there yet.
Most of my hon. Friends, and hon. Gentlemen opposite I am sure, work pretty closely with their local authorities. My authority does not give me the impression of having very much spare capacity for the sort of organisation which, if it is to be successful, this Bill will entail. The demands made upon them in so many directions—and the hon. Gentleman the Joint Parliamentary Secretary to the Ministry of Housing and Local Government will not deny this—not least by his Ministry, are so enormous that they are under constant pressure. Moving into a fresh direction would cause difficulties which we must heed. Now we are to have an essentially do-it-yourself system. If local authorities are to take over, as they must under this Bill, some of the functions of builders' merchants they will have to establish virtually new departments.
§ Mr. Hilton
It is not £3,000 million in the construction industry. It is the whole gamut of services. On the second point raised by the right hon. Gentleman about staffs, local authorities already have the purchasing staffs. I am saying that they might be able to cut their staffs if they are allowed to pool these arrangements. There would be economies that way.
§ Mr. Deedes
The hon. Gentleman is right, but if one increases the organisation and activities of local authorities one increases the pressure on those staffs. 795 Those who are most expert in this matter already have a very great deal to do. Where is the extra expertise to be found? A local authority will have to find resources and recruit staff expert in the ordering, storing and distribution of materials on a considerable scale.
It seems questionable whether such a saving as the hon. Gentleman has in mind would materialise. Even supposing that authorities can provide from within the capacity to undertake the provisions of the Bill, there then arises the general question of efficiency. I am deliberately refraining from raking round some of the unhappy examples with which we are all familiar in direct labour. I do not say that there have not been some successes which would prove less sensational than some of the failures. Let us accept that. Experience in this matter does not encourage me to think that we will get very large overall increases in efficiency and thereby in savings, certainly not of the order of which the hon. Gentleman speaks.
It might be otherwise. Errors made in the direction in which the hon. Gentleman wishes to go will have much wider repercussions than any error made now. If we examine some of the failings that have occurred in direct labour they have not been due to correction or carelessness, but to the fact that those involved have been thoroughly over-stretched. They have been required to do more than the capacity of the organisation could take.
The hon. Gentleman was careful to explain that the powers in the Bill are entirely permissive. If that is true, then they will not require universal application. Yet it is certain that if this proposal were to develop on any scale, the existing distribution system will be damaged. In effect, local authorities will be left with no choice but to resort to the system for which the Bill provides.
But some local authorities might wish to continue on the present basis. Under the permissive powers of the Bill, that might well prove to be impossible. They would find themselves deprived of existing purchasing channels in the construction and building industry. It may seem sensible that local authorities may buy, say, 10,000 bath units and store them and have them available for 796 other local authorities. But suppose that the local authority gets this wrong. Suppose that it miscalculates or that better bath units become available later. What is to happen to the bath units which have not been disposed of? There is an assumption that these figures can easily be calculated. I question that. There is an expertise and method in the distributive system which is being discounted.
I accept the purpose in the mind of the hon. Member for Bethnal Green in proposing the Bill. Certainly, there are advantages in increasing industrialisation of building methods. In the next decade, the building industry will be called upon to increase its present output by about 50 per cent. It needs large orders. It needs continuity of demand if it is to Justify investment in industrialisation. There is a strong case for organising the demands of public clients; I accept that. This has been developed in a number of consortia of local authorities about which the Parliamentary Secretary may be able to give us some up-to-date information.
I understand that in, for example, Yorkshire and the Midlands successful consortia have been formed for purchasing purposes and that larger authorities have been able, not only to draw together their programmes, but to engage highly professional staff and that good results have been achieved. I understand that the Department of Education and Science has done a great deal to encourage the creation of consortia. I hope that the Parliamentary Secretary will be able to give us an account of the progress being made in the formation of such consortia.
There is a strong case for trying to do the same thing in respect of private clients; that would be a further advance. I understood that at one time some hope was reposed in the National Building Agency for this purpose. Perhaps the Parliamentary Secretary will be able to tell us what the state of play is in connection with the Agency. This is a direction in which some if us would be happy to see the building industry and local authorities move. But surely there is a world of difference between encouraging standardisation and industrial methods by grouping consortia and then buying in bulk and the proposals in the Bill. The difference seems to me to be very substantial indeed.
797 With all respect to the hon. Member for Bethnal Green, who obviously knows a great deal about this subject, I suggest that he has got it back to front. The Bill would reverse the process which some of us would very much like to see encouraged. I want the building industry to be encouraged to introduce more mechanisation and to make more use of factory-made components, leading to faster construction which, if we are to fulfil some of the plans now on paper, will be absolutely essential. But, in my view, the Bill will not encourage this movement. It may serve to discourage it.
For that reason, I hope that the Government, although I know that they have assisted the hon. Member for Bethnal Green, will pause before they allow the Bill to proceed on its present lines and realise that if we are to continue successfully along the lines which, I understand, the Ministries of Housing and Local Government and Public Building and Works have been following for a number of years it might prove to be not a stimulus, but a positive disincentive.
§ 11.55 a.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
The Bill does not seek to enact anything spectacular. It is not like a divorce Bill or children's charter which arouse immsense human interest, get columns in the newspapers and interviews on television. What it does, particularly in these days when our economy is in jeopardy and every measure is needed which will asisst in saving money and helping industry, is to contribute in a practical way to the solution of our problems.
My hon. Friend the Member for Bethnal Green (Mr. Hilton), I am happy to say, represents a constituency which adjoins mine, and he deserves considerable praise for using his luck in the Ballot to introduce the Bill. It does for local authorities what London and Manchester have had to do in Private Bills at considerable expense and effort. I remind the Opposition that the Bills for London and Manchester were passed during the term of office of the Conservative régime and did not receive the opposition or the lukewarm praise which this Bill has received.
798 I am astonished at the stick-in-the-mud attitude and the suspicious minds of the Opposition about anything which is brought forward in this way. One hon. Member opposite shook his head when my hon. Friend the Member for Bethnal Green talked about the doctrine ofultra vires.He should know quite well that in law the powers of local authorities are considerably restricted. They cannot go outside what they are permitted to do.
§ Mr. Murton
If the hon. and learned Gentleman is referring to the question of computers, he is absolutely wrong.
§ Mr. Weitzman
If the hon. Gentleman will consult one or two other lawyers, he will perhaps revise his opinion. I am sure that his hon. and learned Friends will tell him that what I have said is correct.
My hon. Friend the Member for Bethnal Green emphasised the permissive powers given in the Bill. There is no suggestion of compelling anybody to do anything or of compelling local authorities to increase their staffs to a tremendous extent or to store up a large quantity of goods and materials in order to draw from them. It will permit them to do certain things which in law they are not permitted to do now.
I read with considerable interest the White Paper published in May this year on Public Purchasing and Industrial Efficiency. It sets out the immense advantages which have been obtained by central co-ordination of purchases. It refers, for example, in paragraph 20, to the Ministry of Public Building and Works undertaking construction work for civil departments and for the defence services and buying many of its requirements of furniture and supplies; to the Stationery Office meeting Government requirements for stationery, printing and office machinery; to the Ministry of Health in meeting its requirements in drugs, dressings and certain medical and surgical equipment for other Government Departments and for the defence services; to the Ministry of Defence buying most 799 motor vehicles for Government Services and petrol, oil and lubricants for a number of civil departments.
Those are not things initiated by the Labour Government. Why were hon. Gentlemen opposite in favour of those things? The Conservative Party supported them because buying in bulk has great advantages, not only in terms of reduced prices but because the buyer can insist on articles being up to standard and on having a much greater variety.
That White Paper dealt with buying by the central Government. It pointed out, in the final paragraph, that the total volume of purchases made by the rest of the public sector was substantially greater than the purchases of the central Government. It went on to propose that local authorities and the nationalised industries should be invited to co-operate, along with other public bodies, to review the position.
In this Measure, my hon. Friend has taken the first step to achieve that purpose. He has every right to do so because I recall the Labour Party, in fighting many General Elections, putting forward the importance of bulk purchasing. Our manifestos have raised this matter, although not enough has been done about it.
My hon. Friend referred to a report presented by my hon. Friend the Member for Buckingham (Mr. Maxwell)—I do not know why hon. Gentlemen opposite should smile at that remark, particularly since I was interested to notice an article in the City columns of last night'sEvening Standard—a paper which is not a particularly great supporter of the Labour movement—headed:Now Wilson may take a leaf out of the M. & S. book ".It referred to the report made by my hon. Friend the Member for Buckingham, although it seemed not to have noticed the direct step being taken by my hon. Friend in the Bill. It referred to the £13,000 million spent by public authorities and how much could be saved by reaping the advantages of centralised buying in the way that Marks and Spencer and John Lewis do it.
Hon. Gentlemen opposite are only too ready to commend the methods of large 800 companies—to point out the great profits that they make as a result of their buying techniques and so on—yet when we come to consider these methods being used by local authorities, with every penny being paid by ratepayers, they hesitate to support a Measure of this kind when it is directly aimed at assisting authorities to follow the practices of large companies, practices which at present local authorities are not permitted to adopt.
I recently came across an example of how money could be saved in the public sector by purchasing in bulk. This case was in respect of meat for school meals. An important industrialist—as far as I know, a supporter of the Conservative Party—pointed out to me that a number of local authorities have contracts with large companies and buy on a large scale. These companies are large enough to provide the necessary facilities, including up-to-date refrigeration and other plant, modern types of transport able to deliver the meat in hygienic conditions, and apparatus so that the meat can be properly prepared and hygienically handled.
This industrialist went on to point out that a number of other local authorities go to their local butcher, that they pay higher prices for their meat and that obviously the same facilities and equipment cannot be provided. I am not suggesting that this is completely analogous. However, we must consider the saving that could be achieved—not only in financial terms, but in terms of the services that could be obtained—if local authorities combined with other public bodies to have a central store from which they could draw.
I understand that local authorities spend £3,000 million a year on the purchase of materials and the provision of services. This is an immense sum. It is estimated that, by using bulk purchasing methods—by using the methods permitted under this Bill—there could be a saving of about 5 per cent., or £150 million a year. That is not to be sneezed at and every effort should be made to assist local authorities, to achieve that result. What an immense saving of ratepayers' money that would represent!
It should not be forgotten that the Greater London Council has this special bulk purchasing power and that it buys 801 about £5 million worth of goods for the London boroughs. I wonder if hon. Gentlemen opposite would suggest that that is wrong, that the G.L.C.'s storing facilities are wrong and that this method of proceeding for purchasing goods should be abandoned?
A local authority which buys its own coal, fuel, stationery, and so on, would save great sums of money if these items could be purchased by a central authority buying in bulk for all local authorities, with each authority being able to draw what it needs. The price of these items would obviously be less, the standard would be higher and there would he a greater variety of choice.
Consider the question of services; the use of plant and equipment for road making and the joint use of expensive items of that sort. A great saving could obviously be achieved. We talk glibly today about the need to use the most up-to-date equipment and more computers. If we are to take advantage of the latest technological advances, we must remember the immense expenditure that is involved in so doing. If we had the co-operation foreshadowed in the Bill between local authorities and public bodies, that expenditure could be greatly reduced and the use of these items would become practical.
The Bill would enable agreements to be made between local authorities and public bodies to allow goods, materials, supplies and services to be provided in this co-operative fashion. I beg hon. Gentlemen opposite not to be so suspicious when a Bill of this kind is introduced. They should not say "Nationalisation lies behind it", or, "It is introduced by a Labour hon. Member. There must be something wrong with it".
Many hon. Gentlemen opposite are businessmen and have far greater experience of business than I have. I have had considerable contact with businessmen over many contracts, but in a legal way. Hon. Gentleman opposite should be concerned not with the suspicions which they have voiced, but should want to help the country by supporting any Measure which could possibly assist us to overcome our present economic problems. The Bill would enable local authorities to purchase goods in a way that would help the country. It provides a splendid opportunity for the House to 802 render a real service. It is introduced at a vital time to assist the economy and I urge hon. Gentlemen opposite to see that it receives a Second Reading.
If those who object to some of its provisions have helpful suggestions to make, they should make them in Committee. If, at heart, hon. Gentlemen opposite are willing to assist the country at this time of economic difficulty, they should be ready to examine any Measure that has a possibility of providing this assistance. I congratulate my hon. Friend on introducing the Bill and I trust that its provisions will receive statutory sanction.
§ 12.9 p.m.
§ Mr. James Ramsden (Harrogate)
When I say that there are things wrong in this Bill, I assure the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) that it is not because it emanates from the benches opposite, still less because it has been moved by the hon. Member for Bethnal Green (Mr. Hilton). No one could have made a more persuasive or moderate or convincing case within the limits of the Bill and what is wrong with it.
The hon. and learned Member for Stoke Newington and Hackney, rested his argument on the advantages which might accrue from the increased use of facilities for bulk buying, and he dangled in front of the House a carrot of £150 million worth of saving. There really is a fallacy here. The functions of buying by builders' merchants—and it is the trade of builders' merchant which this Bill seeks to replace by the activities of local authorities—is by no means the most important.
There is much more to the business of a builders' merchant than just buying stock. There is the financing of stock and having it available to the customers at the right time and seeing that it is delivered on the site in the right order. I hope that my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) will bear me out, because he knows much more about the building industry than I do. I should have thought that in the building industry where there is by no means a continuous flow, where its activities are interrupted by weather and even by edicts of Government about capital expenditure, there are advantages 803 in the flexibility of supply through the activities of builders' merchants. Therefore, the argument about bulk buying is not really conclusive.
This Bill originally aroused my interest because of the experience I had with building when I was a Junior Minister in one of the Service Departments, which at that time, as the House will know, ran works departments of their own. Each of the three Service Departments organised its own building and maintenance, and it had done for many years, and so one saw something of the administration of a public building department. The House will recall also that in 1962 or 1963, these building departments were abolished and their activities were concentrated in the Ministry of Public Building and Works. I cannot help setting the objects of this Bill against the lessons which emerge from the action taken by the Government in their own building activities.
When the Government undertook this reorganisation they expected advantages to be derived from greater centralisation. Those advantages were expected to flow from the consolidated Department's working, where possible, in association with the local authorities, with the ability to place larger contracts and so be in a stronger position to specify the type of materials it was felt could be economically supplied. All this could happen now. Local authorities have the possibility of organising their demand within their existing powers.
The idea behind this reorganisation was certainly not in the direction of the Government doing any building themselves. The practice of putting jobs out to contract remained and was even extended, and it was from that that the advantages were expected to flow. It is also to be noted that although the job of maintenance was moved from the Services' departments and put under the Ministry of Public Building and Works —I mention this because maintenance is mentioned in Clause 1—the proposal to centralise maintenance was one of the most arguable parts of the whole proposition. I think I am right in saying that it was only by a comparatively narrow shift of balance that it was finally decided to have maintenance under the Ministry of Public Building and Works.
804 As a result of this organisation, although it would have been possible, for the Ministry to consider going into business as builders' merchants, there was no suggestion at any time that it would be desirable for the Ministry of Public Building and Works to undertake such activities.
Therefore, my first point is that, from what one has seen from one's experience of how the Government have organised themselves in relation to their own activity in building, the trend of Government is against the direction mapped out for us in this Bill by the hon. Member.
The hon. Member talked a great deal about the organisation of demand. It does not seem to me that this Bill is about the organisation of demand. Organisation of demand can be taken care of and improved within the existing system. This Bill is much more about the organisation of supply, which is a very different thing and which the present system adequately takes care of. Therefore, having expressed doubts about the principle, one must look fairly closely at what some of the effects of the Bill would be.
This Bill allows local authorities to set themselves up as builders' merchants, and I do not like this idea at all. When I say that hon. Members may say that this is due to hoary prejudice liable to be found on these benches. We are all bound to have our prejudices, but I think this is a justifiable one. I am against putting the small businessman out of business if one can possibly avoid doing so. One has only to pick up any local trade directory to see that there are umpteen builders' merchants in any locality. It is a very diversified business, carried on by a very large number of small firms, and it is all the stronger for that.
§ Mr. Hilton
Does the right hon. Gentleman not realise that their trade is to serve private builders rather than local authorities and that, therefore, there is no danger to their existence?
§ Mr. Ramsden
It is inevitable that if alternative sources of supply are set up by the local authorities they would squeeze the small man out of the market. I am all in favour of squeezing the small 805 man out of the market if he is not efficient—that is what the market is for—but I am against his being made to run the risk of being squeezed out by a body which has no test of its efficiency other than that of a public audit and is cushioned by capital found by the ratepayers.
§ Mr. Costain
I do not want to sidetrack my right hon. Friend, but may I remind him that these merchants supply many builders who work for local authorities, which are now going to hold stocks. These merchants will not be there and able to supply the builders.
§ Mr. Ramsden
I am very much obliged to my hon. Friend, who is deeply versed in this industry, for his support, and I think he bears out what I am trying to argue.
It seems to me that this attitude is not one of prejudice but can be justified by common sense. It seems to me that running a builders' merchanting business is one sort of skill and that administering a local authority and its affairs is another sort of skill. The two things are different. The test of the ability of a builders' merchant is his profit and loss account at the end of the year, and if he does no good he goes out of business. The test of a local authority can only be retrospective, through the audit which is conducted into its affairs. We have all heard of cases, some not too long ago, which do not lead us to view the prospect of an extension of these activities by local authorities with any great enthusiasm.
§ Mr. Peter Emery (Honiton)
Would my hon. Friend be in favour of the Bill if subsection (1,b), referring to maintenance and, therefore, to building merchants, were not in the Bill? I ask that because it forms only a very small part of the Bill, and I think that it would be wrong for the Bill to founder purely as a result of that small point.
§ Mr. Ramsden
In fact, I was addressing this part of my argument really to subsection (1,a). Obviously the Bill could be improved, but I tried to say at the beginning of my argument that it was not particularly desirable in principle.
Subsection (1,c) worries me as well. As I understand it, it will enable local authorities to go into the small plant hire 806 business. At the moment, that activity is predominantly in the hands of fairly small operators. Local authorities avail themselves of their services by putting out to contract jobs for excavating machinery, J.C.B.s, road maintenance machinery, hedge cutting machinery, and so on, giving employment to a great number of people. When they are not engaged in local authority work, the firms fill in by giving their services, for example, to the local agricultural community. By having the two outlets, they can give the services which they set out to supply at a very economical figure. This is a well organised and efficient market for services, and I should be sorry to see it disappear. I see no reason for it, so I have reservations about subsection (1,c).
As my right hon. Friend the Member for Ashford (Mr. Deedes) said, the hon. Member for Bethnal Green has been very bold in tackling this subject and in bringing this Bill before us. It is not without its controversial aspects. Its advantages are based on an argument which, in the light of our present knowledge, cannot be more than speculative. I should have been happier if the Bill had been brought forward under the auspices of the Government and proceeded by the normal processes of examination and the preparation of a White Paper. One would find oneself on much stronger ground had that happened.
I have tried to inform myself about the preliminary examinations and studies of the subject which have been made. Reference has been made to a report produced by the hon. Member for Buckingham (Mr. Maxwell). It is voluminous. Certainly it is not uncontroversial and, so far as I have been able to ascertain, it is not accepted unreservedly by the building industry.
I think that the House should be hesitant about according a Second Reading to the Bill for the reasons which I have expressed. If, as one gathers, the Government are in support of the hon. Member for Bethnal Green, they should assemble more information and assist him in the preparation of a more convincing case, and then return to the House for our approval.
§ 12.25 p.m.
§ Mr. Arnold Shaw (Ilford, South)
I am amazed that one of the main points put forward from the other side of the 807 House is that this is a Measure which should be advanced by the Government, since it is a major one. I agree that it has elements which are of major importance, and I congratulate my hon. Friend the Member for Bethnal Green (Mr. Hilton) on bringing it forward. However, the principles contained in it have been accepted already. It must be remembered that it is a permissive Bill and, in order to put them into operation otherwise, it would be necessary for a local authority or a group of authorities to promote a private Bill. As hon. Members know, that is quite an expensive and long process. This Bill would obviate that having to be done, bearing in mind all the time that, should it be passed, it is completely permissive in respect of local authorities.
The other point which amazes me is that I assume that it is being opposed by right hon. and hon. Gentlemen opposite. Under the London Government Act of 1963, the then Government, now happily in Opposition, wrote in Section 72 which, generally speaking, gave the same powers to the Greater London Council which my hon. Friend proposes to extend to authorities all over the country.
I represent a part of the Borough of Redbridge, and I am a member of that local authority. I can assure the House that the Act of 1963 has been of great assistance to boroughs in the London area. All that an education officer has to do when going out to tender is to examine the prices set down by the Greater London Council and compare them with those offered by other suppliers. In practically every case, supplies now come from the Greater London Council. The effect is that the ratepayers of my borough are saved vast sums of money because the G.L.C. is able to undertake this service. If the same facility were extended to the rest of the country, ratepayers everywhere would be saved equally vast sums.
During local elections, all poltical parties press electors to vote for them with the slogan, "Should we be returned, we will keep the rates down." In many instances, it is a pious hope, but here is a specific cause for keeping down the rates. I would commend the Bill if only because right hon. and hon. Gentle- 808 men opposite so far have not made out any convincing case against the contention that vast savings would be made.
§ Mr. Walter Clegg (North Fylde)
Can the hon. Gentleman be a little more specific and give some positive indication of the savings made in his own borough?
§ Mr. Shaw
I cannot give actual figures, because I have not got them to hand. However, I suggest that the fact that we buy from the Greater London Council, in the main, as against other contractors means that we buy goods of similar quality and quantity at cheaper prices. Price is the only criterion, granted that other conditions are right. That has been our experience.
Given this facility, I suggest that other authorities could do the same. It seems almost immoral to deprive local authorities of the right which they may or may not use, according to their wishes. The only opposition to the Bill which I can see is based purely on doctrinaire lines. I deplore that.
§ 12.30 p.m.
§ Mr. R. Bonner Pink (Portsmouth, South)
I have a considerable amount of sympathy with the aims of this Bill. I appreciate that there are considerable economies in size. Economies of size, of course, produce better buying. If they are sufficiently large they can result in the use of computers. The use of computers themselves can lead to better stock-keeping, and this is something which the larger authorities have already done. They have already centralised their buying.
My authority for many years has had a central buying and contracting organisation with centralised storage. The biggest savings are, however, in standardised specifications. We have found that where committees were buying on their own the specifications were very near to each other, but not quite the same. By using a centralised buying organisation specifications could be standardised and economies made. They could also entail larger buying quantities.
I think the sponsor of the Bill is overoptimistic about the savings which can be achieved. Many purchases for the committees are in themselves small. The economies will be, not in the buying quantities primarily, but in standardised 809 specifications. I do not think we could achieve very major savings unless the whole thing were organised on a nationwide scale, which I do not imagine to be the intention of the Bill.
I do not think the Bill is necessary for agreement on specification standards. I do not think it will help on standardisation. I understand that legislation is not required for co-operation on standardisation because this is a function ancillary to the normal functions of a local authority and therefore no specific authority is needed for this purpose. Obviously, where there is a large county authority with a number of smaller authorities under it, savings could be made. When, as I understand would be possible under the Bill, the expansion could go outside the authorities themselves, the advantage would be very doubtful.
For example, it would be possible for local authorities to supply hospitals. There the requirements for most items are so different that there could be very few savings. Food is probably one of the major items, but there again the quantities required in individual establishments are small. I do not think bulk-buying there would have very much advantage.
I do not object to subsections (1) to (4) of Clause 1, which define the goods and services provided, but I object to subsection (5). That seems to be drawn very widely indeed—in fact almost without limit. I am not a lawyer so I cannot interpret what is intended, but it seems that under that heading there could be included such organisations as public liability companies, trade unions, voluntary organisations and other bodies which should be outside the scope of the Bill. This subsection widens the whole Bill so that any local authority could virtually supply any body with any thing.
§ Mr. Hilton
The subsection means that any public body so designated would have to be designated by the Minister in an Order which would have to be confirmed by this House. It gives the House complete scrutiny at all times.
§ Mr, Pink
I appreciate that, but it leaves the Minister with very wide powers in considering a public body. I must oppose the Bill on these grounds. It should be far more specific. It is far too wide and vague. I appreciate that 810 local authorities' powers are limited and I appreciate the difficulties and expense of bringing in Private Bills, but what is needed is not a Bill such as this but a more general Bill embodying all the powers which local authorities have already through private Acts which they could operate.
§ 12.35 p.m.
§ Mr. Laurence Pavitt (Willesden, West)
the hon. Member for Portsmouth, South (Mr. Pink) has put forward some very useful arguments in favour of the Bill. I was disappointed that, having opened so optimistically, he found reasons why he could not support the Bill. He made an extremely good case on a number of practical points on which he was following the lines suggested by my hon. Friend the Member for Bethnal Green (Mr. Hilton).
I join with others in congratulating my hon. Friend on his luck in the draw, and even more on his choice of subject and the very mild way in which he put forward the matter with close argument to persuade the House to give the Bill a Second Reading. I have had the privilege of attending many of these luck of the draw debates and I have found this morning's a first-class example of how an hon. Member should introduce a Private Member's Bill.
I cannot accept the last point made by the hon. Member for Portsmouth, South, that if an enormous saving would not be made it is not at all worth making a saving. If only a small saving were made it would be worth while. I stress that the Bill is permissive. It forces no one to do anything, but it provides that the facilities given to London, Liverpool, Manchester and other big cities can be shared by places which have not facilities to enjoy the same kind of advantages.
I noticed with interest that the right hon. Member for Harrogate (Mr. Ramsden), when making a plea for the little man, was supported by his hon. Friend the Member for Folkestone and Hythe (Mr. Costain), who knows all about little businesses. The amazing thing to me about the weight of attack from the Opposition benches is that hon. Members opposite are always saying how anxious they are to save public money. They are always anxious to reduce the 811 burden on the ratepayer. My hon. Friend the Member for Ilford, South (Mr. Arnold Shaw) has had to fight candidates in his area who used the title "Ratepayers' Association". Yet, when we have a Bill which would give practical advantages to ratepayers—[HON. MEMBERS: "No."]—and support for the ratepayers, we find more hon. Members on the benches opposite than we have seen on a Friday for a long time present to vote against it.
There has been much talk about the weight of bulk-buying. It has been suggested that if only there is a large quantity to be considered, a saving can be achieved, but in the last 20 years we have seen a complete revolution in the techniques of using purchasing power to get the best bargain for the people concerned. For Marks and Spencer's they are the shareholders, for the Government they are the taxpayers and for a local authority they are the ratepayers.
The hon. Member for Portsmouth, South spoke about standardisation. The ability to rationalise orders over a wider area; the ability to cost and to demand costings, as private business does before placing a large contract, so that the eventual liability is known for certain; the ability to prescribe standards so that, if a delivery falls below standard, it is not accepted—we ask that all these things, which private enterprise has been able to perfect since the last war, shall be used in precisely the same way, not only by the London boroughs, but by all local authorities.
I was interested in the point raised by the hon. Member for Portsmouth, South as to how far Clause 1(5) extends. Does it cover the hospital service? If so, a great breakthrough can be made on a number of issues. Last week we debated the question of the way in which domiciliary and hospital care can be married to achieve savings in the treatment of patients. A patient is a patient, whether he is being treated by a general practitioner or in a hospital.
In the case of old people, there is a great need to be able to rationalise the purchasing of things like incontinence pads, which are used in hospitals and which are also used by local health authorities in the care of elderly people. If the Bill can help in this regard, a great 812 service will be rendered to the hospital service. Local hospital management committees, which already have purchasing officers, could, by co-ordination with consortia of local authorities, effect considerable savings for the taxpayer.
I hope that the result will be that we can break down the existing barrier. The classical example in the hospital service at the moment is that, because it is a separate Ministry, more than £1 million a year is paid in S.E.T. to the Chancellor of the Exchequer, only for the Minister of Health to pay it back again to the hospital service immediately because hospital services are not liable. I repeat, because I regard it as important, that if the Bill results in the breaking down of barriers between public bodies, a great service will be done, not only for the ratepayer, who is primarily concerned, but also, if the public body is, for instance, the hospital service, for the taxpayer as well.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington)
If the Minister so approves, a regional hospital board would be a public body within this subsection. This is subject to agreement. There is no compulsion about it.
§ Mr. Pavitt
I thank my hon. Friend for that reply. I understand this to mean that an Order would have to be laid before the House so to designate the hospital service. This opens up a further possibility. I will give a further example of how taxpayers' and ratepayers' money is being wasted.
In many hospitals there is a need to maintain grounds and gardens so that the hospital concerned is not just an institution, but is a place where people can be cured. There is a large expenditure which goes to keep up grass, lawns, gardens, etc., in order to make hospitals cheerful places in which the sick can recover. At the same time, local authorities have parks departments with a complete range of hot houses, greenhouses, and all the technical things necessary to create beauty in the locality.
A tremendous saving could be effected if services could be transferred or amalgamated so that all these things could be undertaken by a consortium. There could be large savings to the hospital service, because a parks department, whilst it is 813 dealing with six parks, could just as easily look after two lots of hospital grounds for much less cost than obtains at present.
The point about computers and a large-scale service which can be more effectively and more efficiently used over a larger area has already been made. I am also thinking of the bulk purchase commodities like petrol. This might well be the type of thing where vast savings could be gained by the marriage, so to speak, of public bodies and local authorities over a large area. At present, it does not pay a hospital to have petrol pump of its own. Given a larger area, petrol could be bought in bulk and transport costs saved.
The Bill is a small and sensible one. It is the type of Bill which will not force anybody to do anything but which will let out of a straitjacket councils which would like to improve their handling of the expenditure of ratepayers' money so as to get better value for the money spent. I hope that the Bill will not be resisted now, but will be given a Second Reading. The genuine points raised by hon. Members opposite can be dealt with in Committee. I hope that eventually it reaches the Statute Book.
§ 12.45 p.m.
§ Mr. Oscar Murton (Poole)
No hon. Member, with the exception of my right hon. Friend the Member for Ashford (Mr. Deedes), has done more than touch upon Clause 1(1,d). I believe that at this stage a great deal of attention should be focused on this subsection. Hon. Members opposite have asserted that their concern is for ratepayers. Concern for ratepayers is not a monopoly of Labour M.Ps. We on this side, both individually and collectively, have nothing but the greatest concern for ratepayers.
It is in connection with Clause 1(1,d), which would provide that an authority should be able to carry outworks of maintenance in connection with land or buildingsthat this concern is most properly manifested. My right hon. Friend the Member for Ashford said that he would not go into the details of certain unfortunate circumstances which had arisen throughout the country in connection with councils' direct labour departments. It is important that the attention of the House 814 and of the country, which might well suffer as a result of the Bill, should be focused on some of the deficiencies which have been exposed during the last year.
On 31st January, 1967, I took part in a major debate in Standing Committee B, which was considering the Housing Subsidies Bill, on the question of direct labour departments. One would think that those hon. Members opposite who have spoken today and who represent London boroughs had been to a seminar or study group in the London Borough of Southwark. It is extraordinary to me that they have not heard about what has happened there in the matter of maintenance. To quote one example, 2,300 hours have been taken to paint six houses and eight garages. By any standards, that is an unconscionably long time. Since 1965, the London Borough of Southwark has a total overspending in its direct labour organisation of £447,000.
We all know also the dismal record of Salford. This is the biggest "daddy" of them all. At the last reckoning it had overspent in excess of £½million on contracts which in total should have amounted to under £5 million.
I am glad that the hon. Member for Liverpool, Walton (Mr. Heifer) is in his seat. I am sure that he has come specifically to listen to this debate. The great City of Liverpool—at that time, but fortunately not now, a Labour-controlled county borough—overspent on its estimates £451,000 exclusively on house maintenance and repairs. That equalled a 4d. rate to the Liverpool ratepayers. This is one of the things that we are most anxious should not happen should the Bill go through.
§ Mr. Eric S. Heffer (Liverpool, Walton)
It is not that I want particularly to chase hares on this Bill. I want to point out that when the hon. Gentleman speaks about overspending what he means is that the direct works department was doing far more maintenance work and clearing up the mess which had been left over the years. In that sense, it went over the estimates. Work was being done. It was not that there was wastage. The direct works department was going so fast that it was clearing up the mess which had been left. This is the truth. I do not care what hon. Members opposite say, but this is the situation in Liverpool.
§ Several Hon. Membersrose—
§ Mr. Murton
I am interested in the hon. Gentleman's explanation. I am certain that the Leader of the Liverpool City Council will be interested in it, too.
§ Mr. Tim Fortescue (Liverpool, Garston)
I think that my hon. Friend will be interested to know that in my constituency, where I see a large number of constituents every Saturday morning, the fact that corporation houses are now remaining unoccupied for far shorter periods than they were during the time of Labour control of the city is put down unanimously by my constituents to the fact that the direct labour department is not now a monopolistic body in that city.
§ Mr. Murton
I am grateful to my hon. Friend for his intervention. It bears out what I know to be the real facts. It is against this sort of background that we have to consider the Bill.
I am sorry to say that a large part of the trouble has been caused by the Government themselves, because the right hon. Member for Coventry, East (Mr. Crossman), who at that time was Minister of Housing and Local Government, saw fit, by Circular 50/65, to abolish the principle of one contract in three being put out to tender. This was a retrograde step, and that notorious circular has been the cause of much of the trouble.
On the question of maintenance, one of the main problems which arose in Southwark—apart from the amount of money which was spent—was the fact that 58 vehicles were bought which were largely unsuited to their tasks. If this sort of thing happens, it might be a good idea if people are able to hire these vehicles, possibly for some tasks for which they might be suited, but to my mind this is not the way to do business.
I had hoped that the hon. Member for Bethnal Green (Mr. Hilton) would be here when I made my speech. No doubt he has gone for a little much-needed bodily sustenance. I feel in some difficulty in saying this when he is not here, but I am certain that he would have taken it in the right spirit had he 816 been present. The Bill smacks largely of what has happened in the Co-operative movement, of which the hon. Gentleman is a distinguished member. I would have thought that what had happened there over the past few years, and its record of difficulty in trading and in manufacturing, would have made him a little more careful about raising this issue.
§ Mr. Pavitt
Perhaps the hon. Gentleman will address himself to the experience of the Co-operative movement since 1844, and the large savings, £60 million this year, by way of dividends to housewives.
§ Mr. Murton
I find it extraordinary that one of the two main manufacturing centres of the Co-operative movement may have to be closed. This is the sort of thing that we have to get into perspective when discussing a Bill such as this.
Moving into the realm of the nationalised industries, one of the things that the National Coal Board attempted to do —and I know this because I was deputy secretary of one of the headquarter divisions—was to close down the middle man on the marketing side, and to distribute direct. Over the years the Board learned that this was utter folly. I would hate local authorities to be given permissive legislation to do just this sort of thing. Already, to carry out central Government directives, local authorities have had to increase their staffs by 150,000 since 1964. If they are to have these hiring departments, I believe—and I am sure that my hon. Friends will agree with me—that they will need even larger staffs to do this work.
Quite apart from that, however, which in any event is bad for ratepayers, because more salaries will have to be paid, I cannot see how it is possible, as the hon. Member for Willesden, West (Mr. Pavitt) suggested, for hospital grounds to be looked after by local authority maintenance departments. Possibly in London hospitals happen to be near local authorities, but hospitals generally are not necessarily in that position, and in my county, if this were carried to its logical conclusion, maintenance staffs would have to travel 75 miles a day to weed the gardens in the major hospital in Dorset. This would be absurd.
817 I think that about this Bill there is that Fabian inevitability of gradualness in a move towards nationalisation. This is nothing more than a form of nationalisation. The concept that if one gets bigger and greater things one will get economy has been proved to be false time and again. The charge will be levelled against me that I am supporting private enterprise. I am proud and glad to say that I am. The little men of this country are the men who pay the taxes. It is they who employ people who have to pay the rates, and I think that it is a retrograde step that in the Bill there should be Clauses which will have an effect on the small businessman, because it is he who carries the risks. If he makes mistakes, he goes to the ground. If a local authority carries the risks, and makes mistakes, the ratepayers have to put their hands even deeper into their pockets. This is not the way in which the economy of the country should be run.
§ 12.57 p.m.
§ Mr. A. P. Costain (Folkestone and Hythe)
I would like, first, to assure hon. Gentlemen opposite that if I thought the Bill provided any method of saving the ratepayers' money I would support it to the hilt. I am sorry that the hon. Member for Bethnal Green (Mr. Hilton) is not in his place. I know that he is having lunch, but I hope that if he enters the Chamber he will be free to interrupt me in the arguments which I shall put forward, having had considerable experience in this matter in many directions.
I gave the hon. Gentleman notice before the debate that I would refer to the fact that Aneurin Bevan put me in charge of a very big housing scheme for local authorities immediately after the war. I tackled this problem on behalf of my company, under his Ministerial direction. We had the experience then of dealing with about 700 local authorities, and we built 20,000 houses, so I am not speaking without some experience of local authorities.
In another sphere, I had the opportunity and the privilege of running a complete department for one of the largest public companies in the world. I had the opportunity of reorganising a section of its buying and stores department. I have also had the opportunity of being a member of the Public Accounts Com- 818 mittee, and seeing the problem of checking local authority and Government matters.
I congratulate the hon. Member for Bethnal Green on his luck in the Ballot, and on the modest way in which he moved the Second Reading of the Bill. The House has agreed that. Nobody can deny that the hon. Gentleman is having difficulty in defending the Bill. He said that he was not starry-eyed about it, and he has every reason not to be. Every hon. Gentleman opposite who has spoken has referred to Marks and Spencer. Hon. Members on this side of the House have referred to the Cooperative societies.
I should like, first, to deal with the difference between the buying of Marks and Spencer and that of local authorities, Government Departments, and big industrial organisations. That is the heart and guts of the Bill. Those of us who have had the opportunity of seeing how Marks and Spencer buy, supervise their stock checking and their deliveries, know that it is a very efficient organisation. It is efficient because it has a board of directors with the ultimate responsibility for taking business risks.
The hon. Member for Bethnal Green has now returned to the Chamber. I repeat my offer that I shall be delighted to give way if at any time he wants to interrupt me. I want to develop an argument which I hope that he will appreciate, in his patient way, because I admire his connection with the building industry.
In Marks and Spencer, if a director or a manager makes a mistake he is ultimately responsible to the shareholders. But as long as the company is, successful overall and makes profits the shareholders are not too worried. The difference between such a company and organisations controlled by the Government, a local authority or a committee is that they cannot take business risks.
When I was on the Public Accounts Committee it came to our notice that frauds were taking place in the buying or selling of National Savings Certificates. I cannot disclose how they happened, and I do not remember the exact figure, but they involved £7.000 to £10,000 or less. It was in the national interest that they should be stopped. After the matter went to the Treasury, it was delighted that the frauds had 819 been stopped—and did not think that there was anything peculiar about its costing £75,000 per annum to put in an organisation that saved under £10,000.
One of the basic differences between a local authority or a Government and a private enterprise concerns risk-taking. It is one of the reasons why the direct labour organisations that have been referred to do not work. I explained in the absence of the hon. Gentleman that I had experience of reorganising a £13 million-a-year buying and development programme of a big industrial company. When I put in a team to analyse it, there was no difficulty over bulk purchasing, to enable us to have control and place orders which would give manufacturers long-term opportunities. There is an attraction in that. But because the Treasury lives from year to year no local authority can have that advantage; the suggested advantage of saving money by bulk-buying and long-term buying money is lost, for the very nature of the Treasury organisation does not allow that. Following the process through, we find ourselves left with the disadvantages and not the advantages of bulk buying.
The company to which I referred had a magnificent stores organisation. One of the things that it used to boast about was that it was jolly difficult to get material out of the store—but that is the attitude of a stores organisation.
At one time I was put on the job of building a railway very rapidly. I got special priorities from the then Commander-in-Chief, Middle East, because it was in wartime. I put in an order for fish plates to bolt my rails together, and I got back a splendid letter from the stores superintendent to say that the store was out of fish plates, but in view of the Commander-in-Chief's priority he was sending me dinner plates—and I received dinner plates with which to build a railway. That is the sort of thing one comes across when one tries to reorganise specialised technical buying by people who cannot do it.
The problem here is that the hon. Gentleman has simply taken the total expenditure required and said, "I can save 5 per cent., and that is my £100,000 saving." But as in all his Party's national planning, as in all his Socialist 820 theories, only one side of the question is considered. He has completely forgotten the cost of storing the goods. He has said that the builders' merchants do not supply the local authorities. I interrupted him on that point, and he said that he did not agree with me. But, if the builders' merchants are not to be used, who the dickens will the enormous stores needed be put? Where will the material be kept? What is the cost of rehandling, of keeping a particular item of stores for a period, with only a local authority wanting it?
My right hon. Friend the Member for Ashford (Mr. Deedes) made a very good point about the purchase of baths. One of the difficulties about the house programme to which I referred earlier was the question of who was responsible for breakage. As the hon. Gentleman knows, a great problem of delivering baths to a building site is breakage. Once there is a super authority buying for a whole lot of small authorities and things are dropped, who will bear the cost of breakages? Will it be the ratepayer of the purchasing authority or the other authority concerned?
There is an even more important point. With his vast experience of the building industry, the hon. Gentleman knows that one of its greatest costs has been shown by several Committees to be caused by materials not arriving at a site in time. That has been calculated to account for up to 5 per cent., and sometimes 10 per cent., of the labour costs. It upsets labour relations because the whole bonus system goes out of the window. The men cannot get on with the job as they have not got the materials. Will the great multi-purchasing authority say, "We have caused an extra 10 per cent. increase in labour costs on this job and, therefore, we shall take money from our ratepayers' and give it to the ratepayers of the other authority?" That is the sort of problem that arises when one starts municipal trading.
§ Mr. Hilton
I cannot believe that the hon. Gentleman is putting the whole of his heart—he is certainly not putting his mind—into some of his arguments. He has made the analogy of a new construction site, but there is nothing about new construction in the Bill. Local authorities which are already allowed to carry out 821 bulk purchasing do not have huge warehouses. The manufacturer distributes to them after the contract has been made.
§ Mr. Costain
Local authorities are today carrying out building, and when the Bill says that they shall not carry it out, I fail to understand the sub-section concerned. Is the hon. Gentleman saying that the Bill will prevent the local authorities' direct labour organisations which happen to be building new works from taking advantage of the Bill? I think that the subsection restricting building is just a bit of political eyewash.
Even in respect of the definition in Clause 1(4) the hon. Gentleman says that maintenance includes minor renewals, improvements and extensions. If extensions are not new work, what are? He particularly puts them in the Bill, and no argument is put forward to say that they will not be allowed. If the hon. Gentleman's only objection to the points that I am raising is that I am referring merely to new work, let him show me why the Bill does not allow direct labour on new work to take advantage of it.
With regard to maintenance work, the hon. Gentleman put forward the extraordinary argument that through having bulk buying—he put it in a very classical manner about anatomy—he would be able to standardise an apparatus to fit everybody's anatomy. But, unfortunately, everybody's anatomy may not be exactly the same. From the maintenance aspect—he is now claiming that his Bill is all about this—there are already installed thousands of different apparatuses, to fit similar anatomies. If one had bulk buying of one form of lavatory seat a great many computers would be needed to deliver for maintenance purposes the right one to the right basin, and what an organisation it would need! It is practical applications like this that are not taken into account when we get to factors of this sort.
That is why I feel that the hon. Gentleman, who has been so extremely lucky, has missed a chance to bring in a Bill which could do many other things besides this. Many of my hon. Friends want to speak, and so I do not want to monopolise the debate, but there are a number of points that I want to raise.
I hope that by the time the Minister replies to the debate he will have had a 822 chance to look into the matter of housing programmes and will be able to tell the House where the broken components still are and where they have been charged. Perhaps he can tell the House how the maintenance of that type of construction is proceeding and who is stocking these items, because no builders' merchants stock them. No small builder can go and collect them as he used to be able to do Once one starts bulk buying one stops bulk servicing.
One hon. Member spoke about the small builder and said that we take an interest in small companies. Of course we do. Many large companies, including my own, were originally small companies. The hon. Member also produced a report to which I had intended making a great deal of. reference, that dealing with public sector purchasing. It is much in line with some parts of the Bill. I did not give the hon. Member for Buckingham (Mr. Maxwell) notice that I would raise this matter, because I expected that he, as a sponsor of the Bill, would be here. He has probably read the report inThe Timesthis morning about the £5.5 million that he is worth, and it may have distracted him, and perhaps he is engaged on putting the matter right. It seems to me that he cannot claim that he is ani-profit, like some of his Socialist colleagues feel.
So I shall not develop this in the way that I should very much liked to have done, except to say that, running through this document, he emphasises the power of the purchaser. He makes special reference to the fact that the Government are big buyers. What he is really saying is that the man who pays the piper should call the tune. That is what is running behind the document.
This is why some of us are somewhat suspicious of a permissive Bill like this which gives permissive powers, and when we have a report put to the Prime Minister that he is not using existing powers and spending the money of taxpayers and ratepayers to put industry into its place—that is what it says—we are very suspicious when the hon. Gentleman introduces a Bill which has the object of giving local authorities the power.
Local authorities at the moment have all the power they need to supply themselves. Many local authorities are 823 forming consortia under the present law. If that is not so, how is the Nottinghamshire experiment arrived at? How, if local authorities have not already the power—
§ Mr. Costain
I am most grateful to my hon. Friend. He has made just the point that I wanted to make. It should be noted that the Nottinghamshire County Council has the power to deal with an organisation which it is capable of dealing with. When my hon. Friend says that he supports the Bill I think he overlooks the fact that it gives power for a great number of local authorities to combine. Such an activity as this on a small scale can work. It cannot work satisfactorily on a big scale. If my hon. Friend can answer the simple question of how on a big scale one supplies lavatory seats he will go some way to help me.
§ Mr. Costain
My hon. Friend is being too helpful. My organisation gave up central purchasing 10 years ago. What we are doing is what I explained earlier. We have a central buying department which accepts quotations, not buys. This is another point that I have against the Bill. We believe—this, again, is where local authorities go wrong—that authority and responsibility have to be very closely knit. The closer one can make responsibility and authority, the more efficient an organisation is. If one has a central buying organisation whose job is to interview the buyers and it has all the attraction of buying and then says, "All right, we have bought all the bricks that you want", the general foreman on that site can only telephone the brick company and ask when the bricks will be delivered. That is how it used to work.
But it does not work that way today. The general foreman on the site has no power of persuasion with the supplier. 824 This is the great point; the man who is doing the job ought to be given the maximum authority. He should be able to telephone the supplier and say, "If you cannot supply them, I will order them from somewhere else." If the organisation is a central buying department, the foreman cannot do that.
There is a story that the hon. Member for Bethnal Green will know very well, that of a joiner who but of two of his fingers but did not know that he had done it and said "Good night" to the buyer. This is the sort of thing that happens in the building industry. One must have responsibility and authority in the same line, and then one gets progress and ability.
But under the organisation proposed in the Bill one has people divesting themselves of responsibility. One gets the buyer saying "It is not my fault. The stupid sanitary ware manufacturer did not make them in time. He misread the colour. It is not my fault. Get hold of him." The man in charge on the site telephones the manufacturer and says, "Do not be stupid. It is your buyer's fault." In that way one gets telephone call after telephone call. and that has not been taken into account by the hon. Member for Bethnal Green. Our contention is that the Bill is unnecessary because the powers which local authorities have at the moment are sufficient to enable them to organise in a reasonably small way.
I come back, finally, to the example of Marks and Spencer. In that organisation, if someone has made a boob, the chairman can send for him and ask why. If the reply is, "Because of Mr. so-and-so", the chairman can have them both in the same room. They have some responsibility but, of course, in the end the responsibility is his, although he can knock their heads together for their mistake. Can one imagine two county council chairmen getting two of their servants in a room and trying to find out whose mistake it was?
I think that I represent more mayors in this House than any other hon. Member. In my constituency, I have four mayors and two chairmen of urban district councils.
I do not make a point of it except to show that I have a good deal of experience of local authority interplay and, fortunately, that interplay is good. But if we are to make one authority responsible for the progress of the building of another, or responsible for a process involving another, there is bound to be friction. The Bill is unnecessary and, much as I admire the hon. Member for Bethnal Green, I cannot support him.
§ 1.21 p.m.
§ Mr. Kenneth Marks (Liverpool, Gorton)
We have been asked by Mr. Speaker to keep our speeches brief, and I shall endeavour to do so with mine. I have great interest in the work and organisation of local authorities. I do not represent a London borough, however; nor have I attended a seminar in the London area. But I thank my hon. Friend the Member for Bethnal Green (Mr. Hilton) for introducing the Bill. He must feel rather like the Lancashire councillor who made a proposition in the council and, realising that he would be defeated, although there was no discussion whatever, demanded the right to reply to all the things which had not been said.
I have listened to all the speeches today. Most of them, except for the last two from the benches opposite, seem to have supported the general idea of the Bill while criticising details. I am inexperienced in these matters, but I thought that the purpose of a Second Reading debate was for general approval before detailed discussion.
The Bill will clear up doubts in the minds of many officers and members of local authorities about their powers. These doubts exist and the fact that the County Councils Association, which is by no means nowadays a Socialist body, supports the Bill, as do other representative associations, seems to me to stress the point that they would like to know where they stand and that the Bill will help them to do so.
Half my constituency is in the City of Manchester and the rest is two urban districts in Lancashire. I would like to have the same powers for the parts outside Manchester as those within the city without all the necessity of the expensive business of bringing corporation Bills before Parliament.
826 There are many points on which local authorities feel that they could co-operate but where they are uncertain of their powers. Some of them are too small to be able to own, for example, the necessary plant for the normal street cleaning and gulley emptying and other things. Some local authorities have such equipment, but may not have sufficient use for it and could let it out to another. That happens in my constituency, but whether it is legal I am not so sure after listening to the debate. But things like that are needed.
Another example is that of the overspill estates, neighbourhood centres, where, for example, the local authority building the centre is responsible for the shops, the county authority is responsible for cleaning and the urban district is responsible for the library. They should all be able to work together under one aegis, perhaps a single architect, for all the necessary jobs. The Bill would provide that power.
As far as I am concerned, what is good enough for Manchester is good enough for the rest of my constituency, which should not need to go through all the paraphernalia of private Acts of Parliament. Co-operative societies have been mentioned. The failure of many of the smaller societies lies in their failure to make use of the permissive legislation within the movement similar to what we are arguing for today.
§ 1.25 p.m.
§ Mr. Peter Emery (Honiton)
I shall follow some of the arguments of the hon. Member for Liverpool, Gorton (Mr. Marks), but later in my speech. If I do not do so immediately, I mean no discourtesy to him. I congratulate the hon. Member for Bethnal Green (Mr. Hilton) on the Bill. I do so not only on the manner in which he introduced it, but also because I believe that I am so far the only hon. Member on this side of the House who supports him.
The Bill reflects, in my opinion, an acceptance of modern thought in business management. Indeed, it at last appears to condone the realisation of the immense importance of ensuring that purchasing of goods is something which should not be done haphazardly, and that people who spend large sums of money should be highly professional in their approach and properly trained in so doing.
827 I must make my own position clear. I am the Director of the Institute of Purchasing and Supply and Secretary-General of the European Federation of Purchasing, and I spend considerable time trying to ensure that industry and Government shall be able to obtain the greatest economies by buying properly and efficiently.
Indeed, in training, it cannot be denied by anyone on this side of the House opposing aspects of the Bill that everybody now doing buying ought to be trained not only in the conduct of negotiations but in the legal aspects of contracts, in transportation, in quality and reliability control, in storage, in distribution, in budgeting, in stock control and in 101 other techniques.
The Bill is essential to allow local authorities to have the opportunity of combining trained personnel and staff so that their departments can have the sort of staffing which will be able to bring about the economies which most local authorities ought to wish to obtain. It is obvious that the structure of purchasing and supply in local government is not organised on the lines of a highly efficient purchasing department in modern industry, and why should it not be so organised?
Of course there are exceptions. The best example of this is that of London. Under the old London County Council, it was estimated, some five years ago, that the savings brought about by the central supply department in a year period amounted to about £2 million to £3 million when the spending total was about £18 million. This was accepted by both sides of the L.C.C.
The Bill, with the possible exception of the provision dealing with building maintenance, gives no extra power or authority to local government to do anything for which the power or authority does not at present exist, except that it allows a public body or local authority to agree to pass or delegate some of that power. So larger units can exist and exercise that power with greater efficiency and with greater savings for the ratepayer or taxpayer. In other words, in practice it would not increase the purchasing power of any local authority, but it would allow a small urban or rural authority to ask a county council or 828 larger municipal authority to buy for it or to be allowed to indent on that larger authority's stock holdings, and county authorities would be allowed to cooperate in their purchasing.
As there have been many generalisations during the debate, I should like to give some practical examples to prove my case. I instance the purchasing of educational stationery and materials. There are eight big counties which have major supply departments—Devon, Essex, Hampshire, Hertfordshire, Kent, Nottinghamshire, Surrey and the West Riding—and their purchasing covers approximately 37 per cent. of all county council children throughout the country. I have taken another ten counties without central supply departments—Lancashire, Cheshire, Durham, Staffordshire, Derbyshire, Gloucestershire, Somerset, Berkshire, Northumberland and Warwickshire—which purchase for 36 per cent. It will be seen that I have chosen analogous types of counties in the two groups.
It is interesting to note that expenditure on educational stationery and materials in the counties with supply departments cost £2,014,000 for a school population of 1,447,000. In the ten counties the cost of exactly the same supplies is £2,255,000 for a school population of 1,358,000. In other words, a direct comparison between those using central purchasing and stock control techniques and those not shows a saving by the former of about 19 per cent. This type of saving is what the Bill tries to encourage.
§ Mr. Costain
These figures are most interesting, but they do not mean very much unless we know the opening and closing balances before purchasing started. To say that so many children use so many notebooks and so much paper does not mean a thing unless those opening and closing balances are known.
§ Mr. Emery
I accept that completely. I have taken the figures from the Educational Statistics Analysis, 1964–65, of the Association of County Treasurers. My hon. Friend will see from that that the figures are presented from an absolute base. The opening and closing balances are therefore taken as standardised. I would not attempt to mislead the House by giving false statistics.
829 I turn to an area with which I am now fortunate to be associated, the South-West. I compare the supply of the same materials in Cornwall, Dorset, Somerset and Exeter with the cost factors in Devon. My figures may be incorrect by 2 or 3 per cent. and I am not trying to hold them out as absolutely accurate. My estimates show that the costs of the same Education supplies from the central supply department run by Devon County Council are at least 15 per cent. cheaper than the costs of Dorset, Somerset or Exeter and in some instances are as ranch as 30 per cent, less.
I have used this example because the Bill would give local authorities power to get together not only in consortia of purchasing areas, but in co-operation among buying departments. Regionally there would be great sense in Cornwall, Devon, Dorset and Somerset and the county boroughs of Plymouth, Exeter and Torbay, when it comes into existence, farming a consortium for purchasing. This would not necessarily mean that there would be one central purchasing authority stuck in Exeter or Plymouth. The counties would be allowed to decide that Devon County Council, for instance, could do perhaps one-third of the purchasing of one kind of supplies, that Dorset and Somerset could co-operate to do the other third, and Cornwall the final third. It would allow for co-operation which at the moment the law does not allow.
I cannot see why Conservative Members should wish to prevent Conservative authorities from coming together if they want. The Bill does not force them to do so. Secondly, how can Conservative Members suggest that the law should restrict Conservative local authorities from using supply departments run by county councils if they want to do so? The Bill does not force them to do that, but why should they not do so if they so desire, especially when the economies which they would be able to make would be considerable?
A number of other advantages have not been mentioned. There is, first, the subject of stock control. When a vast number of authorities have to hold considerable stocks scattered throughout the country, there is not only an inefficient form of stock control, but an inefficient employment of capital. The more one 830 can run a centralised stock authority, the less is the total level of stock required for the same number of people. As a prime illustration I use a nationalised industry, the National Coal Board, which a few years ago when modern purchasing and stock control techniques were introduced was able to bring down its stockholding from about £90 million to about £65 million in two and a half years, with fewer thwarted acquisitions. In other words, the efficiency of its stores department went up.
§ Sir H. Harrison
Will my hon. Friend also call attention to the enormous stocks of coal piled up at the other end as a result of the Coal Board's inefficiency?
§ Mr. Emery
When we debated the Coal Board's borrowing powers the other day, I tried to deal with the stock levels of the produced goods, in that instance, coal.
But that now has nothing to do with this Bill in any way. It is nothing to do with decreasing the production stock level. I would like to see some stock control operated at the production end in the Coal Board, as it is operated on the purchasing side. One talks about control of capital, and a number of my hon. and right hon. Friends have said that in a local authority there is no control of the capital employed. This can he argued but what I would ask is: have we examples where that control has lapsed?
I have made inquiries of Devon and the Greater London Council. The turnover of warehouse stock holdings for the G.L.C. is eight times a year. In Devon it is six times a year. As my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) will admit, this is certainly as good as most private firms and very much better than many.
My hon. Friend may have inadvertently misled the House in one of his arguments. He asked who was responsible if the purchasing officer for a county made a mistake. The person who has to bear the cost is the ratepayer, whereas in the firm, because it is a matter of decreased profitability, it is only the shareholder who bears the loss. That is true but the argument does not go far enough. It is only half the case. Of course there will be errors. There are errors at all times. However, what this 831 Bill will allow is a greater efficiency of purchasing, ensuring that the savings achieved will be so appreciable that errors can be written against them. There is really only a benefit. Errors are made in purchasing, and my hon. Friend is suggesting that these errors might be maximised rather than minimised.
§ Mr. Costain
My hon. Friend said that I misled the House, inadvertently. I hope that he will withdraw that, because it was not done, even inadvertently. The point that I was developing was to do with the Coal Board argument. Where one have a boss who can knock people's heads together matters can be sorted out easily. Where there is no such boss then there is always argument about who is responsible for a mistake and that is what costs money. The savings produced by this Bill would be offset by extra costs.
§ Mr. Emery
Of course I withdraw any imputation against my hon. Friend. It seemed to me that the wrong conclusion might be drawn from his argument. I do not differ with him when he says that there must be someone in control. My hon. Friend went on to say in his speech that there was not centralised purchasing in his company, but he will admit that there was centralised negotiation, and there is indentation against a centralised purchasing factor. That cannot now happen across county boundaries and this Bill would permit it.
It is unfortunate that a lot of the debate has been taken up with the point about builders' merchants and the holding of building supplies. Probably no more than 15 per cent. of the total purchasing power which the Bill would allow to be properly rationalised lies in this direction. I wonder, if it would mean that the Bill could be agreed upon, whether the hon. Gentleman would think it worthwhile leaving this aspect out.
§ Mr. Hilton
The building industry entered into this not because it is important, but because the building lobby here is important. During my speech I made the point, for the benefit of those who care about the builders' merchant, that these people were involved with the economic development committees, which suggested that only by public purchasing 832 could one advance. If hon. Gentlemen wish to oppose the wishes of the builders' merchants, this is the way to do it.
§ Mr. Emery
I was only pointing out that the general principle of the hon. Member's Bill is so important that it ought not to founder because of this small part. I hope that he would seriously consider withdrawing that part in order to get what is the major principle accepted.
Someone said that naturally the county boroughs and municipal corporations were in favour of this because it increased their powers. This is not so. It does not give them any extra powers but merely enables them to co-operate with others in the manner in which their powers are used. The Bill will allow a greater stock control factor than normally exists in local government purchasing. These techniques would allow a decrease in overall stock holdings held by local authorities which would be a decrease in the amount of capital employed, and that would certainly be to everyone's benefit.
Secondly, by encouraging larger units it would allow trained staff to do purchasing and would encourage the setting up of supply and purchasing departments which is useful and proper. It could ensure that better trained personnel would be in charge of these departments, and could bring greater efficiency. At the moment no assessment can be made of the hundreds and even thousands of people having to deal in a small way with purchasing throughout the country, at urban levels, in different departments, in a manner which is in the highest degree inefficient. No one on any side of the House can argue that small unit purchasing can be better than purchasing for large units. If anyone really puts this argument forward then I lose touch with them.
Next we would consider inter-authority co-operation, which is very important. It would allow for hospitals and universities to be designated by the Minister, and for any public factor to be designated. Does this go a stage too far? As I see the Bill the Minister can designate any one a public body. I am sure that this is not intended and that he would not designate Costain's a public authority but the powers exist. [Interruption.] No, I mean the firm, not the hon. 833 Gentleman. There might have to be a slight limitation on the way in which the Minister can designate a public authority. This can be dealt with in Committee. An Amendment that might help would relate to line 18 where there is talk ofminor renewals, improvements and extensions.The extension point can conjure up a major project. It could be a complete new wing, costing £2,000,000 or £3.000,000. It might be advisable to have a financial limitation. I make that point only in an effort to ensure that the Bill is made more acceptable.
There are two matters which have not been raised but which go against the Bill. Carrying the argument to absurd limits, it would be possible under the Bill for all local authorities to say to the G.L.C., "We want you to buy for us". That would be a nonsense. In any purchasing department in any business, not only does one get economies of scale but when a certain limit has been passed there are dis-economies of scale: then one gets vast increases to the cost scale. We must, therefore, ensure that this absurd position does not arise. I am not certain how it can be dealt with in the Bill, but perhaps an amendment could spell the matter out without too much difficulty. We should not want a Durham rural authority expecting London to do its purchasing, which the Bill would allow. I am sure that that is fix in the mind of the Minister or of the hon. Member for Bethnal Green, but, as a supporter of the Bill, I merely refer to this as something which we should thrash out in Committee.
I am sorry that I have made a slightly longer speech than I intended, but, as I find myself on my own on these benches in supporting the Bill, I ask for the indulgence of the House. I have tried to point out what I believe is the basic good in the Bill. This is not a matter of party political contention. In theory hon. Members on both sides of the House want to ensure the most efficient purchasing by local authorities as possible. The only arguments adduced against the Bill have been to the effect that the Bill would not achieve that.
I believe that hon. Members who are against the Bill are flying against all modern thinking about the advanced 834 management techniques which would allow economies of scale to be brought into operation, not only for industry, but for local authorities. If the C.B.I. is willing to encourage private industry to do exactly what the Bill suggests, why should not we be willing to encourage local authorities to do the same? What is good for private business should also be good for the proper management of local government.
§ 1.53 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
Many hon. Members opposite are extremely interested in ensuring that live hare coursing continues and, at the same time, have shown a great interest in the Bill, I should point out that I, too, am very interested in the Bill. Therefore, I wish to make a few remarks about it.
My hon. Friend the Member for Bethnal Green (Mr. Hilton) should be congratulated on introducing the Bill. I was interested in the speech of the hon. Member for Honiton (Mr. Emery). I intervene because one or two remarks have been made about the situation in Liverpool which need clarifying and correcting. For many years we have had a central purchasing department in Liverpool. It was established under the Labour-controlled city council. It has led to great savings of ratepayers' money. At present, we have a Conservative-controlled city council in Liverpool. I have not heard, and nor am I likely to hear, one member of the Conservative-controlled city council demanding the abolition of the central purchasing department simply because it has proved to be a great asset and exceedingly beneficial to the people and ratepayers of Liverpool.
If this can be done in the great local authorities with huge concentrations of population such as Liverpool, it is right that small local authorities should have the opportunity of coming together and creating consortia to do precisely the same. I should have thought that the arguments of the hon. Member for Honiton were conclusive on this matter.
The hon. Member for Poole (Mr. Murton) referred to the direct works department of Liverpool. He gave a figure of over-spending of about £500,000. This concerns the maintenance department. It was not a question of overspending. The works department carried 835 Out a programme of planned maintenance which had never been carried out in the city of Liverpool before. It gobbled up the money quickly, but it did the job quickly. What is it to do—put all those workers out of work? Of course, what it did was to plan further maintenance. In these circumstances, one can appreciate that it used more money than was allocated, and that is what hon. Members talk about when they refer to over-spending. It is not over-spending because the work, and other work which was not originally agreed, was done by the local authority.
I have not heard one word of criticism from the Conservative Party in Liverpool of the direct works department concerning the new building programme. Not only did the direct works department get jobs in competition with private enterprise firms and beat them on a tender basis; the final price in most contracts was lower than the tender price to the local authority.
Let us get this question of direct works building in perspective. It surprises me when I hear hon. Members opposite talking about the overspending by local authority direct works departments. Would the hon. Member for Folkestone and Hythe (Mr. Costain), who is connected with a very large building company, ever suggest that there has never been over-spending on any of his company's jobs? The answer is quite clear, and he knows it, and I know it, having been in the building industry for all my working life.
Many small companies so over-spend that they go out of business. The bankruptcy rate in the building industry is absolutely fantastic. The more bankruptcies there are, the larger the other companies become. The company of the hon. Member for Folkestone and Hythe has a capital of about £2.3 million. It is wrong for the hon. Member to say that he speaks for the little men and little companies. He knows far more about large companies than he does about little companies.
I do not suggest that hon. Members opposite are forming a "building lobby"—a phrase which has been used today. I would never suggest that they were connected in any way with a building lobby. It would be scandalous for 836 anyone to suggest it. It is interesting, however, to note that the right hon. Member for Harrogate (Mr. Ramsden) was interested in certain companies. It is also interesting to note that—
§ Mr. David Gibson-Watt (Hereford)
Did the hon. Gentleman warn my right hon. Friend that he intended to make these remarks?
§ Mr. Heffer
I have not warned anyone about what I intend to say. After all, I am intervening in the debate for only a few minutes.
The right hon. Member for Harrogate has left the Chamber and I am merely pointing out that a number of hon. Gentlemen opposite who have spoken today have, or have had, interests in property, and so on. They have every right to have those interests, in the same way that I am interested, as a building trade worker, in this subject, and I always declare my interest.
My interest may be different from that of a number of hon. Gentlemen on the opposite side of the industrial fence. I have never been ashamed of declaring mine and I hope that they will not be ashamed of declaring theirs.
It is regrettable that, in many ways, this has been made a political issue between the parties. This matter is of great interest to all local authorities, whichever party controls them. This is a sound Bill and it should be approved by the House. It might be in order for me to add that I hope that a little time will remain today to discuss another Bill of which I am greatly enamoured, and about which many of my hon. Friends are waiting in the wings to give it their full support.
§ 2.3 p.m.
§ Colonel Sir Harwood Harrison (Eye)
The hon. Member for Liverpool, Walton (Mr. Heller) may be interested to know that before my right hon. Friend the Member for Harrogate (Mr. Ramsden) left the Chamber he told me, since I had told him that I intended to refer to his speech, that he had to leave because of constituency engagements.
I listened carefully to the speech of my right hon. Friend and, to the best of my recollection, he was referring to his time as a Minister—when the responsibilities of the Ministry with which he was then concerned were transferred 837 to the Ministry of Public Building and Works—and not to any firms in which he had an interest. I hope, therefore, that the hon. Member for Walton will withdraw his remarks about my right hon. Friend.
§ Mr. Heffer
I wish to make it clear that I was not referring to anything that the right hon. Member for Harrogate (Mr. Ramsden) said. I was merely pointing out that the right hon. Gentleman had, or had had, certain interests other than his interests in the House. He is perfectly entitled to have them, as is every hon. Member.
§ Sir H. Harrison
I think that the hon. Gentleman referred to my right hon. Friend's building interests.
The hon. Member for Walton went on to urge us to bring this debate to a speedy conclusion so that the House could discuss the Bill which he has sponsored. That is extraordinary, since the hon. Gentleman had the opportunity on 29th November, behind Mr. Speaker's Chair, to choose a day on which to put down his Bill for discussion, being high enough in the list to be the second Measure for debate on a Friday. Instead—perhaps because he got in a muddle or because he does not understand the procedure—he deliberately chose to be third in order today. rather than to be second on another day.
§ Mr. Heffer indicated dissent.
§ Mr. Deputy Speaker (Mr. Sydney Irving)
Order. Some reference to this subject may be admissible, but to deal with it at length is out of order.
§ Sir H. Harrison
Although a Bill which I am sponsoring was lower in the list, I was able to put it down as second Order for 1st March.
§ Mr. Deputy Speaker
Order. The hon. and gallant Gentleman may make only a passing reference to the subject.
§ Sir H. Harrison
I felt that these matters needed explaining.
I, too, congratulate the hon. Member for Bethnal Green (Mr. Hilton) on 838 his luck in the Ballot and having had the opportunity to bring his Bill forward. I have had some experience of this procedure. I have got two Private Members' Bills through the House and on to the Statute Book. Only last Session I played a large part in assisting through a Measure sponsored by the hon. Member for Morpeth (Mr. Will Owen).
It is always open to an hon. Member who has a high place in the Ballot to choose his subject. He can either choose a subject which is contentious and bear what happens in the House—perhaps a great deal of opposition and a Division—or a non-controversial subject on which he is particularly keen and which he thinks he may be able to get on to the Statute Book.
I wish to declare my qualifications for taking part in this debate. I started my public life by serving for some years on a parish council, possibly the lowest form of council, but one which, particularly when one is very young, is not a bad place to start. I was then for 11 years a member of the Ipswich Borough Council and chairman of the Mental Hospital Committee, which ran its own farm department and had to do a lot of purchasing of the goods it required. I am, therefore, not without some knowledge of local government.
The hon. Member for Walton referred to hon. Members having interests outside the House. I am a director and shareholder in a light engineering firm which makes the road danger lamps which many councils buy to place on roads when they are being repaired. This firm also manufactures the ordinary hurricane type of lamp, and I have sold these to the Army and other Government Departments. I was also connected till a short time ago with a small building firm which makes a type of building material that has been supplied to local authorities. I have, therefore, had an opportunity to see this problem from all angles.
Without in any way wishing to be unkind to the hon. Member for Bethnal Green, I suggest to him that, after he has been in the House a little longer, he will not take everything as gospel. I had the honour to be Parliamentary Private Secretary to Mr. Harold Macmillan when he was conducting his great housing drive in dealing with local 839 authorities. I have great respect for the advice that comes from the officers of the Ministry of Housing and Local Government and I am always grateful when I receive answers from that Ministry to my letters.
I, too, had a Bill which got its Second Reading. Then the Ministry of Transport—it was the then Parliamentary Secretary, the late Sir Gurney Braithwaite, who came to me to inform me of the Department's decision—took over my Bill and said, "We will have to rewrite it". I argued about that, but eventually the Ministry rewrote a great deal of it and I took the Amendments to the Table Office. I was told, in so many words, "This is all nonsense. It is all out of order. You will need a number of new Clauses. It cannot be dealt with in this way." I therefore inform the hon. Member for Bethnal Green that when he refers to Clause 4 having been drafted by the Ministry and that, therefore, he cannot take responsibility for it—that it is so technical and, because the Ministry has drafted it, it is accurate—while what he says is no doubt true, it does not necessarily follow that that is the end of the matter.
Reference has been made to another sponsor of the Bill, the hon. Member for Buckingham (Mr. Maxwell), who it seems, mesmerises hon. Gentlemen opposite. They may even be slightly envious of him. If he really is such a great power in these and similar matters, why has the Prime Minister so far not recognised his talents? It cannot be because the hon. Gentleman has been in the House only since 1964. Many of our present Parliamentary Secretaries were elected between 1964 and today.
§ Mr. Heffer
On a point of order. I made a merely passing reference to the right hon. Member for Harrogate (Mr. Ramsden), who is not now in the House. That was all—a passing reference. It was not a personal attack. Now it seems to me that the hon. and gallant Member has made a strong attack on the hon. Member for Buckingham (Mr. Maxwell), who is not present.
§ Hon. Members: Where is he?
§ Mr. Deputy Speaker
The hon. Member for Liverpool, Walton (Mr. Heller) will remember that I did not rule him 840 out of order in making the comments he did. Nor am I ruling the hon. and gallant Member for Eye (Sir H. Harrison) out of order at the moment.
§ Sir H. Harrison
Thank you for your Ruling, Mr. Deputy Speaker. What I said about the hon. Member was said only in passing.
The hon. Member for Bethnal Green said that bulk buying would do a great deal more to improve, modernise, and hurry up new design. I do not believe that this is so, because the more bulk buying there is, particularly by the Government, or as here proposed, and the local authorities, the more buying is put into the hands of a smaller number of buyers, and this makes it very difficult for a new firm with a new idea to break the monopoly of those people who are buying on behalf of the Government or the local authorities, as is proposed here.
If I may refer to my own experience, I will give an illustration from the firm I referred to. We had to sell to the War Office some years ago a large number of hurricane lamps. We export them all over the world in cardboard containers. Oh, no, it was not good enough for the War Office. They had to be in very expensive wooden containers, nailed down with 36 nails or screws of 1½ in., and inspectors came down to see that this was done. It was a very costly contract for the War Office. I think that I am right in saying, but I am speaking only from memory, that it cost nearly twice as much as ordinarily. Many of us have seen that sort of thing happen, and I do not think there is much difference in this respect between the Ministry of Defence and the former Service Departments in their buying over the years, and what the local authorities will do.
We are thoroughly suspicious of giving more centralised power for buying. It will cost the ratepayers more. One can hardly move without seeing enormous quantities of Government-held stocks still. Only this week I sent a letter to the Minister of Defence. It was from a constituent complaining about overproduction being sold in shops or sold through mail order squares in many of our newspapers. We have raised here in the House this sort of thing in the years we have been here and tried to get an answer, and various committees have sat on the matter.
841 Somehow, there is something inherently wrong in the system. It may be that for security reasons these stocks have to be bought for defence—we are always told this—but then they are thrown on to the open market. I would have to be very much more satisfied than I am that if we had Government buying or bulk local authority buying that would be good for the local authorities.
I listened to the excellent speech of my hon. Friend the Members for Folkestone and Hythe (Mr. Costain). I am not surprise, that he has left the Chamber for a moment. I really hoped that after that speech from a man of great experience the hon. Member for Bethnal Green will withdraw his Bill. However, our debate must go on.
The hon. Member thinks we shall get better design because of his proposal. That is not, in my opinion, true, because there will be fewer buyers and it would be difficult for others to get in. I believe that this has happened very much in recent years—for instance, in the Post Office. Men with new ideas about techniques and the telephone service could not get them accepted by that Government Department. I believe that if we give this power to the local authorities the day will come when we shall see slops disposing of surplus goods overbought 'y the local authorities. I do not think the hon. Member's proposal will work.
I represent here 10 different local authorities and councils. My hon. Friend the Member for Folkestone and Hythe thought he represented the biggest number, bat I have a county council and nine municipal boroughs, rural district councils and urban district councils to deal with.
I believe that at this time in our country's history people are wishing to get away from centralised control by Whitehall. They are getting sick of Whitehall and of the notion about Whitehall always knowing best. I am second to none in my admiration of the members of our Civil Service and their great abilities as administrators, but I am sure that a great deal of our difficulties and our financial position in this country today is because we impose on them jobs for which they are not fully qualified. I think back to the case of the man earning only £1,500 a year who was left to investi- 842 gate the whole of the enormous Ferranti contract.
I believe that we would be in exactly the same situation here if this proposal were adopted. All the tendency is to want to get away from centralised control in London. We have Nationalists in Scotland wanting to get away from it, and in Wales, and even my hon. Friend the Member for Honiton (Mr. Emery) was very nearly, if I heard his speech aright, wanting a region for the counties of the South-West. We in East Anglia also have a pride, ourselves.
This problem would be better solved, I think, if we were to move on rather quicker with local government reform. I am sorry that the present Government have not done more to hurry forward the report of the Commission on Local Government, and to see, what was the intention, many of the smaller local authorities married together.
How do we get the hon. Member's proposal working? I think it fails. I reiterate what has been said by my right lion. Friend the Member for Ashford (Mr. Deedes) and my hon. Friend the Member for Folkestone and Hythe, that the proposal will fall down because local authorities will not want the same things at the same time. It is easy to say that if we want six typewriters, but buy 12, we may get them for 10s. less, but people do not always want them at one and the same time. If they are bought, someone has got to hold them. Moreover, someone has got to pay for them.
I am certain that this permissive Bill will, in the end, be mandatory; I cannot see it working out. How often have we heard in the House that a power is to be permissive, and we do not mean it to go further than that; but then, sooner or later, another Minister or private Member says that it has been permissive for so long so why should we not make it mandatory? That is what I think will happen in this case.
I disagreed with my hon. Friend the Member for Honiton on one point. He was not clear whether there would not be many more local government officers appointed. He said that men experienced in buying might be appointed. I agree, but we shall not get others voluntarily giving up their jobs, and they will simply have superimposed on the work they are already doing, this other job.
843 The hon. and learned Gentleman the Member for Stoke Newington and Hackney, North (Mr. Weitzman) talked of parks and hospital gardens, and said how much better they would be if they were administered by one department. I guess that what would happen would be that the parks superintendent would continue on his present salary and the gardener in charge of the hospital garden would continue, and there would be an administrative department on top, superimposed upon them.
§ Mr. John Wells (Maidstone)
While on this point about municipal horticulture, there is no doubt that every hon. Member who goes to his constituency and sees some of the magnificent displays which are put on appreciates that municipal horticulture is far from economic. It is wasteful and extravagant, particularly at this season of the year there are men —not necessarily in the towns, but in county employment—fiddling about with school playing fields because there is nothing else for them to do, yet at the same time the roads department wants extra men to grit the roads, but the municipal mind does not allow the gardeners to do that, because they come under a department other than the roads department. Will my hon. and gallant Friend be very careful about the staffing problem?
§ Sir H. Harrison
I am grateful to my hon. Friend, who is a very great authority on horticultural matters, for supporting me in what I was saying.
At a time when we see less interest taken in our local authorities, there is a tendency for their members to be overburdened with work, and it devolves more and more on to officials. I believe that we need to encourage our local authorities. If we start taking powers away from them, their fate is sealed. I do not think that that is what people want.
This is an interesting Bill, and we have had a very useful debate. It may be that we do not always give sufficient attention to the needs and difficulties of our local authorities, and we should be grateful to the hon. Member for Bethnal Green for giving us this opportunity to discuss them, though I shall vote the other way if this matter comes to a vote later today.
844 I could say a great deal more. We have all seen cases of inefficiency where local authorities have tried to do too much. We all know the stories which have come to light about direct labour schemes, and I appreciate the hon. Gentleman's wanting to keep that side out of our discussions. There have been many instances, and we could quote them in legion.
I hope that the Parliamentary Secretary will intervene in the debate and tell us a little more about the services side. I am very much concerned that services like those of architects and solicitors may be offered to other authorities. These may not necessarily be the best trained people to give that sort of advice. At least, professional men engaged in practice outside have to earn their livings and make a profit in their professions. Over the years, those in local government service, being assured of their salaries and pensions, think very little of the money side of things. They are concerned far more with administration. I am not sure that we should have them competing with those who practise outside.
In what was a very well argued case, although I do not agree with it, the hon. Member for Bethnal Green did not say enough about the services side, and I should like to hear more. I cannot forget what has been said about the proposed powers being permissive and that they are likely to be taken no further. There is the underlying threat in subsection (5) that they may be wider than we think. Unless the legislation is clear, I think that it will undermine our local authorities and, in the long term, will be costly to ratepayers. That is a matter of opinion, I agree, but I am not convinced that it will save our ratepayers any money. That is why, as a former member of a local authority, I have come to the conclusion that I must oppose the Bill.
§ 2.25 p.m.
§ Mr. George Wallace (Norwich, North)
I do not intend to follow the arguments of the hon. Member for Eye (Sir H. Harrison), but, like him, I have a varied experience of local government going back over many years. The hon. Gentleman seems to be suffering from some type of Whitehall disposals nightmare in his general approach to the Bill, but this has nothing to do with the Bill.
845 The hon. Member referred to direct labour schemes. As he is a well known hon. Member representing an East Anglian constituency, perhaps I might extend a hearty invitation to him to visit the beautiful and wonderful city of Norwich, which has a direct labour scheme that is admitted by the building trade to he efficient and competitive and is well appreciated by the citizens of Norwich. It may be that, later on, these forthright ideas will be brought to fruition in his own constituency.
I am grateful to my hon. Friend the Member for Bethnal Green (Mr. Hilton) for introducing the Bill. His speech was reasonable and did not attempt to be party political in any way. Looking at the Bill objectively, it is sheer, downright commonsense, and I cannot understand the opposition to it. I am inclined, somewhat uncharitably to label the opposition to the Bill as obstinate, because hon. Members who have spoken against it have not been consistent.
I am sorry that the hon. Member for Walsall, South (Sir H. d'AvigdorGoldsmid) and the hon. Member for Woking (Mr. Onslow) have left the Chamber, though I shall not be attacking them, because I have something in common with them. We have all served on the Kent County Council. The hon. Member for Walsall was chairman of the majority party and Leader of the Council. The hon. Member for Woking was chairman of the Finance Committee.
Kent County Council has a first-class Supplies Department, and often the chairman of the finance committee has boasted how well organised and businesslike it is. Kent is not the only large county authority to have this kind of oganisation. However, where it exists and is admitted to be efficient and businesslike in that it saves vast sums of money by bulk purchasing, what is the objection to smaller authorities benefiting and even grouping themselves together to do it?
§ Mr. John Wells
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) and I are the only hon. Members present at the moment who represent Kent constituencies. Although my hon. Friends the Members for Walsall, South (Sir H. d'Avigdor-Goldsmid) and Woking (Mr. Onslow) and the hon. Member for Norwic a, North (Mr. Wallace) have been 846 members of the Kent County Council, may I remind the hon. Gentleman that there are two features about Kent's supplies department which are of importance? The first is the extremely high calibre of the officers, who are way beyond the most efficient and far above the average run of purchasing personnel normally found serving public authorities. The second is the extremely high degree of personal control exercised by such people as my two hon. Friends and the hon. Gentleman opposite. The situation in Kent County Council by no means proves any general rule.
§ Mr. Wallace
I quite agree, though there are many other aspects of the county council with which I have been in violent disagreement for many years. The hon. Members for Folkestone and Hythe (Mr. Costain) and Maidstone (Mr. John Wells) and the hon. Members for Walsall, South and Woking, as past members of the county council, know it from their own experience. We can assume, quite charitably for them, that the efficient organisation and high standard of officer—which I accept—can apply equally in other areas. By interrupting the hon. Member has reinforced my argument.
I said that the opponents of this Bill are not consistent. Like many other Members, apart from my activities in this House, I am engaged in voluntary work in the Health Service. I am chairman of a finance committee. Under my control comes not only the finance officer but the supplies officer. In the Health Service at present there is a rapid development in bulk-buying of many supplies. In my region the supplies officers for the various management committees come together with the chairman of the finance committee to attend meetings and bulk-buying of clothing, food—particularly bread—and linen is going on on an increasing scale. The results we have achieved have saved money where money needs to be saved.
I come to the question of individuals professionally engaged. The hospital supplies officers are men of tremendous ability and standing in their profession. They are able to buy as efficiently good standard goods of quality as well as anyone in private industry. This is saving public money in the Health Service and I hope that it will extend. It applies to dressings, 847 but perhaps drugs are a different problem. Local management committees can come together and engage in bulk buying, so why cannot that happen with local authorities?
I am glad that there has now developed in my area a great deal of sharing of costing equipment. The installation of costing equipment for a small committee would, of course, be expensive, but in the Lewisham area there is some apparatus which many other management committees use. This is beginning to show a great deal of saving in administration. This is why I say to hon. Members who have opposed this Bill—the majority of whom are Conservatives, and there are many Conservatives in hospital management who support and praise what is going on—why should they not be consistent? It may be that some hon. Members present do the same in hospital affairs as I do. If so, why do they not apply this to other fields of local government?
There does not seem any argument against the general principle of the Bill. There may be certain parts to which hon. Members take rigid and serious objection. That is fair enough. That is where the Committee stage can come into operation. Considering the benefit of the ratepayer and the taxpayer, there can be no reasonable excuse for rejecting this Bill. On principle alone it should be given a Second Reading. Then in Committee we can put it into shape, possibly by accepting Amendments which hon. Members wish to put forward, but please do not reject the Bill.
§ 2.34 p.m.
§ Mr. Charles Morrison (Devizes)
I am sorry that the hon. Member for Bethnal Green (Mr. Hilton) is not now in his place, because I wished to join with my hon. Friends and with hon. Members opposite in congratulating him on the persuasive and commendable way in which he introduced the Second Reading of the Bill.
I do not think it will have escaped the notice of the House—I have been in the Chamber for the whole of the debate except for about 20 minutes—that only one co-sponsor has supported the hon. Member. I think he will be very disappointed that his other co-sponsors have not 848 been present to do so. However, I have studied the list of sponsors and I discover that the hon. and learned Member for Warrington (Mr. W. T. Williams) is among them. I recall an occasion when I was introducing a Private Member's Bill ostensibly with the support of the hon. and learned Member. He was a joint sponsor but, rather to my surprise, he devoted the whole of his speech to opposing that Bill.
§ Mr. Speaker
Order. It is not out of order for the hon. Member to speak about the Bill which we are discussing.
§ Mr. Morrison
The debate has been characterised by hon. Members opposite and by my hon. Friend the Member for Honiton (Mr. Emery) pointing out the theoretical attractions of the Bill, whereas hon. Members on this side of the House have generally pointed out the practical disadvantages. Everyone, of course, would be strongly in sympathy with any Measure which could cause a saving of as much as £150 million, which the hon. Member for Bethnal Green hoped his Measure would save. While we can have general sympathy with the objectives of such a Bill, that does not mean that we can or need have sympathy with the particular proposals put forward to achieve those objectives.
I admit that apparently originally the Bill was motivated by the rather naïve assumption that any task performed by either central or local government would be carried out with greater efficiency and at much lower cost than if it were performed by private enterprise. Unfortunately the opposite is usually true. That is because government at all levels is borne down by a very considerable administrative burden and high overheads which most private enterprise firms do their best to get rid of, and because central and local government simply cannot go bankrupt. Consequently there is no pressure on cutting costs nor any bonus for efficiency. As my right hon. Friend the Member for Harrogate (Mr. Ramsden) said, the only test of a local authority is the negative one applied by the auditor.
Nevertheless, I think the Bill reflects once more the growing concern which exists over purchasing by local authorities and central Government. This is a matter to which increasing attention should be paid, for three reasons. First, 849 we know that so far as we can see in the future resources for all forms of programmes—programmes for schools or hospitals or leisure-time facilities, programmes of many other varieties—are bound to be in short supply. Even if there were a Government in power pursuing all the policies necessary to produce a fast national growth rate, which manifestly at present there is not, there would still be a demand for resources considerably in excess of anything likely to be made available.
Secondly, at least we on this side of the House know that no solution to the lack of resources available for Government purchasing can allow any higher taxation because higher taxation would do nothing but stifle ambition and decrease the incentive of an improved personal standard of living. To even the present Government, who have slapped on an additional burden of over £1,000 million in taxation and at the same time produced a virtually stagnant economy, this must be gradually becoming self-evident.
Thirdly, everyone has more than a shrewd suspicion that present purchasing policies by all levels of government leave much to be desired and do not produce the same cost-saving benefit as many of the policies which are pursued by the more efficient companies. Therefore, public purchasing of all sorts and kinds deserves the closest of attention. The Bill has lone a service in providing an opportunity for further discussion of the subject.
It is worth pointing out that in private industry good purchasing is often a good factor in profitability. I am told, for example, that a 1 per cent. cut in the cost of raw materials may make a 10 per cent. difference to final profit. Many successful company doctors make purchasing policy one of their first lines of attack when reorganising a badly run company.
From the very size of the total public sector purchasing it is easy to conclude that a very small percentage saving could produce a very large saving in real terms. Taken as a whole, public purchasing power amounts to an annual expenditure of £14,000 million on goods and services. I believe that it includes, for example, 60 per cent. of the output of the construction industry. Local government expendi- 850 ture amounts to about £3,000 million a year in England and Wales. By any standards, the scope for increasing efficiency and for cost saving must be considerable.
The question always is—how can these savings be achieved? This is the question which has been occupying the minds of many of the more enlightened forward lookers, and perhaps I may include the hon. Member for Bethnal Green in this category, although I disagree with the solution which he puts forward. My right hon. Friend the Member for Wallasey (Mr. Marples), for instance, has been applying his most active mind to this problem for the past few years. In the United States of America there have been both research and development into cost-saving policies. The results of their application in several American government departments, notably the Defence Department, have been considerable.
In March, 1966 my right hon. Friend the Leader of the Opposition launched his War on Waste Plan and suggested a target of a 5 per cent. saving on relevant Government expenditure of £8,000 million. He therefore proposed a cost reduction of £400 million. I believe that such a reduction could be achieved if the right policies were introduced.
It is not only individuals who have been facing this problem. It is also the electorate as a whole, for in the spring of this year the Conservative Party won the G.L.C. elections, having fought partly on the need to cut waste. That the Conservative Party won showed that the electors in London were fully aware of the waste which was going on and of the need to cut it. It is sad, perhaps, that the present Government have not seen fit to apply themselves in the same way to this problem as they have to many others, nor even to adopt some of the ideas which have already been proven in the United States.
It must be largely because of the Government's inactivity in this sphere that the Bill is introduced as a Private Member's Bill, because in its scope and content it could hardly be less suitable as such a Bill. I believe that it is introduced as such because there is beginning to be a little frustration among hon. Members opposite at their own Government's inattention to this kind of problem. 851 Naturally we detect the hand of the hon. Member for Buckingham (Mr. Maxwell) behind the Bill. He is the latest to study, and to go into print on, public sector purchasing. I have not read the whole of his Report, but I have, for greater accuracy and information, obtained a copy of it. I have read with particular interest what the hon. Gentleman says in the section on local government. I could not help a rather wry smile about this statement on the front of the Report:During 1963 and 1964 Mr. Harold Wilson, then Leader of the Opposition, repeatedly stressed the enormous power which modern government has if it is prepared to use its great strength as a buyer. He intended to comb through the trade and navigation statistics and use the Government's purchasing power in order to save imports and to reward the efficient and export-minded.Where is the intention now, and what have the Government done to use their strength? I suggest that they have done precisely nothing.
There is within the Report a paragraph quoting someone who is apparently speaking on behalf of a county council concerning its current purchasing policy. This passage is of considerable relevance to the Bill. I am sorry that the hon. Member for Buckingham is not here. I had assumed that he would have been present. This is the sentence I wish to draw attention to:The Council" —that is, the county council—have the usual standing orders as to contracts, which follow very closely the model forms issued by the Ministry of Housing and Local Government.This county council is apparently now spending £33 million a year on revenue account and £5 million on capital account. On page 33 this sentence appears:Bulk purchase of goods of all kinds, including clothing, educational supplies, food and equipment for institutions of various sorts, are always made after invitation by public advertisement.That sounds interesting.
The passages I have quoted are sentences which were originally used, apparently, by individuals speaking on behalf of the county council. At the end, the conclusion which is apparently drawn 852 by the hon. Member for Buckingham is this:We believe that educational establishments and hospitals which are managed in England and Wales by some 150 local education authorities and 400 hospital management committees are wasteful and uneven in their performance. We see here considerable scope for saving by amalgamating them for buying purposes into larger units ".In spite of what the individuals speaking for the county council stated, it seems that the hon. Member for Buckingham believes that there is inefficiency still, and in general I would not disagree with him. I would like the House to note that apparently there is inefficiency in spite of the fact that bulk buying is practised within the local authority mentioned by the hon. Gentleman. Surely this is relevant to the Bill? The hon. Gentleman is arguing that local Government should be reorganised, and on this I am right with him, but it was his Government which decided to take minutes and waste years by establishing a Royal Commission—
§ Mr. Morrison
The hon. Gentleman will have to wait until the Report is made.
On a subsidiary point—and this, I think, would help local authorities in their purchasing—it might be a good idea if the Ministry of Housing and Local Government were to look again at the model forms of Standing Orders. This might lead to the sort of savings which the hon. Gentleman is trying to achieve. I believe that further savings could be made by local authorities themselves if they made better use of the powers which they have already, and if they made greater use of modern management methods.
I cannot believe that the kind of measures proposed by the Bill will have any practical advantageous effect on costs, taking local government as a whole. Indeed, all the evidence—and a good deal of it has been put forward by a number of hon. Members today—is very much to the contrary, and for this reason I shall oppose the Bill.
§ 2.52 p.m.
§ Mr. Walter Clegg (North Fylde)
I trust that my hon. Friend the Member for Devizes (Mr. Charles Morrison) will forgive me if I do not follow him entirely 853 in his argument. I congratulate the hon. Member for Bethnal Green (Mr. Hilton) on the way in which he introduced the Bill. He set a good example to many Members on the Government Front Bench by the way in which he did it. He was concise, and his case was well argued.
I came into the Chamber not entirely convinced one way or another about the issues which we were to debate, and one must be impressed by the fact that the Bill is supported by the A.M.C. and the County Councils' Association. These are bodies for which we have a great deal of respect. I have therefore listened both to the case made by the hon. Gentleman and to the one which has been developed against it, especially by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain).
The argument put forward by the hon. Member for Bethnal Green about large savings to local authorities would, if it were substantiated, be almost decisive in determining which way one should vote on the Bill, but I do not believe that he has sufficiently substantiated the argument that there will be sufficient savings to make the Bill worthwhile.
The hon. Gentleman has relied to some extent—possibly because no other figures are available—on the document published by his hon. Friend the Member for Buckingham (Mr. Maxwell), but I confess that my respect for the hon. Gentleman's figures has diminished recently on seeing on the menus of the House of Commons, which are under his control, the figure of 7½ per cent. for gratuities, and to discover, on this being split up, that it is 5 per cent. for wages, and 2. per cent. for gratuities. It is therefore a little understandable if I look somewhat askance at the figures put forward by him.
The argument as it has developed has been not so much on the purchasing side, but on the question of the supply by local authorities to other local authorities. This is where the real division comes, and on this part of the argument I was particularly impressed by the vast experience of my hon. Friend the Member for Folkestone and Hythe. It is undoubtedly the case that if local authorities are given these powers considerable capital will have to be spent in setting up warehouses and storage premises, because I do not believe that it will be practical for a 854 smaller local authority to say to a big one, "I want a particular article from you the next time you buy it.". I do not think that smaller authorities will want to work in this way, because it may not be buying for some considerable time ahead. If the system is to work, warehouse and storage units will have to be set up, which will involve not only the capital cost of setting them up, but the capital cost of storing goods which are to be provided for other local authorities.
I do not believe that local authorities have men of sufficient skill to judge what the demand will be from other local authorities for a particular item. A misjudgment by the purchasing member of a local authority could result in that authority suffering a considerable loss. He might choose a particular type of lavatory pan, or plumbing materials, which suits his own authority, but he may find that he cannot sell it to other local authorities. I think that we would get a commercial atmosphere arising out of the supply part of a local authority's functions.
One might see a local authority which has a stock of goods which it is finding difficult to dispose of hawking them around other local authorities, and finally having to resort to the kind of disposal sales which the Service Departments have had to carry out. Ratepayers would be very concerned if they were involved in losses of that kind.
Another matter which has caused concern to hon. Members on this side of the House is the power which it is proposed to give the Minister under Clause 1(5) to specify the public bodies. For my undoubted sins, I am a Member of the Select Committee on Statutory Instruments, and I see the enormous number of these which is brought before the House. Are not we deluding ourselves if we think that there is real Parliamentary control? How many times do we have a real chance of debating and getting the Minister to change his mind on a small Order of this kind? They would just pour through. If there were a provision for taking the decision-making from the Minister and giving it to a more objective body, perhaps the Select Committee on Statutory Instruments, I should probably be more sympathetic towards the Bill.
855 Concern has also been expressed about the definition of maintenance, which includes "minor renewals, improvements and extensions." I have seen some extensions that are greater than the original project. I have seen schools extended so that the original part of the building looks like a cockleshell when compared with the rest. This makes the definition far too wide. The word "improvements" can also be given a very wide interpretation.
One cannot disregard the arguments of the hon. Gentleman for Bethnal Green. They are impressive, but he could also have made a very good case in theory for a similar Bill to authorise direct building. We know that in practice direct building produces great losses to local authorities, and that is the fear which I have about the Bill. In theory, it is fine. Practically, it could lead to great losses.
§ 3.0 p.m.
§ Mr. Marcus Kimball (Gainsborough)
Many of my hon. Friends still want to speak, so I shall be brief.
The Bill would seriously affect three major firms in my constituency which supply equipment to contractors. Over the past few years, many firms of contractors, both large and small have been built up in this country. They give a very full and efficient service to local authorities at competitive prices. The Bill would deliberately hit that movement, which has brought so much prosperity to many firms in Lincolnshire.
I knew that the hon. Member for Bethnal Green (Mr. Hilton), in introducing the Bill, would make great play of the savings made by bulk-purchasing in the experience of the G.L.C. supplies division. The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) also spoke about this. But the figure is very much in doubt, and certainly would not apply in a large rural area. The G.L.C. works in a very compact, small area.
Who is to say that proper account has been taken in the G.L.C. figure for storage, repacking and distribution, which are all hidden in the vast departments of such a mammoth organisation? They have a special advantage, because they are particularly near a closely-knit market. The G.L.C. experiment, of which so much has been made today, 856 involves only £30 million a year, which is but 0.1 per cent. of all local authorities' purchasing.
The real trouble with the Bill is that it would change the manner in which consortia now operate. It proposes a central buying authority. I expect that my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) can confirm my understanding that at the moment there is a consortium which gets together to win contracts for the supply of materials to local authorities. I do not see what is wrong with that system. Each local authority is responsible for placing its order with the consortium, and the system has worked very efficiently for a considerable time.
All of us have in our constituencies a large number of builders' merchants, although, unfortunately, they seem to be becoming fewer and fewer. They provide an important service to the local community, including the finance of many small builders. That is taken into account in the margins allowed by the purchasers of building materials. I shall certainly vote against the Bill. I fear that if it goes through, it will weaken the ability of the builders' merchants to help finance the small local builders, and the housing programme will suffer. In Lincolnshire, small builders still provide six out of 10 of the houses being constructed at present.
Once the local authorities start manufacturing under the Bill, what will they manufacture? They will make concrete blocks, joinery parts, pre-cast units, the very things which are already in overproduction, which are easiest to produce, and on the production of which I do not want to see the local authorities embarking.
A great deal has also been said in the debate about standardisation. Hon. Members have said that there is a need to reduce the present variety of products, and my hon. Friend the Member for Folkestone and Hythe made great play about a particular product. I do not see that we do not already have sufficient organisations to deal with the problem of standards and standardisation. Most of us would not agree that the question applied to the supply of electric light points and plugs. We have the British Standards Institution, which already has local authority representation on it. There is also the National Council of Building 857 Material Producers, which has pressed the Ministry of Housing and Local Government for the past 20 years to take action requiring local authorities to use British Standard products in their specifications.
Those are the sort of subjects I should like to see actively pursued, rather than forcing through a Bill which, judging from my humble experience, is not suitable as a Private Member's Bill. The other Bills quoted have all been Government ones. This Bill raises far larger issues, and I hope that we shall not see it on the Statute Book.
§ 3.5 p.m.
§ Mr. Graham Page (Crosby)
I hope that my rising at this stage will not be taken as any collusion between the two Front Benches to cut down the debate. I rise because I think that the House would like some comment from the Government Front Bench on the contents of tile Bill and the purposes behind it, and we probably shall not get that comment until the Joint Parliamentary Secretary can sweep into his speech any rude remarks that I may make about the Bill and endeavour to answer them.
First, I add my congratulations to those of other right hon. and hon. Members to the hon. Member for Bethnal Green (Mr. Hilton) not only on his fortune in the Ballot, but also on his power of persuasion and explanation in connection with the Bill. I do not congratulate him on the subject of the Bilk The Long Title says:To make further provision with respect to the supply of goods and services by local authorities…"—That is, to increase any existing powers. indeed, there are existing powers in the hands of local authorities in connection with the supply of goods and services.
The Bill seeks to empower local authorities to deal in goods and services not only as between local authorities themselves, but also as between a local authority and what is described in the Bill as a "public body". So we have this wide Long Title to the Bill to which my right hon. Friend the Member for Ashford (Mr. Deedes) drew attention when he spoke of the wide area that the Bill could embrace. Whatever the Bill now contains by way of limitation of the goods and services to 858 which it applies, it is open at later stages, if the House accepts the Second Reading of it today, to Amendments expanding the scope of trading now envisaged by it—though it is fairly wide as it stands. It speaks ofany goods or materials…any administrative, professional or technical services …any vehicle, plant or apparatus … works of maintenance ".The hon. Member for Bethnal Green said that the Bill does not contain productive functions. But it could easily do so, by Amendment, at a later stage. The words "purchase and store", in the latter part of Clause 1(1), might well be extended to cover manufacture and other similarly extensive powers for local authorities.
Right hon. and hon. Members have talked mainly about the relationship under these trading powers between local authorities themselves, but there is a hair-raising definition of "public body" in the Bill. Something which may be defined by the Minister as a public body is a public body. There was an intervention in the debate by an hon. Member that my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) could himself be declared a public body; he certainly gives public service. However, as I think the Joint Parliamentary Secretary admitted in an intervention, the definition could allow local authorities to provide goods and services for hospitals, nationalised industries, supply undertakings, universities and any public body of that sort.
So the House should take care not to launch, by giving it a Second Reading, a Bill which could grow to a dangerous size, and should especially take care not to launch such a Bill in advance of the report from the Royal Commission on Local Government. This very important point was made by my hon. and gallant Friend the Member for Eye (Sir H. Harrison). We have been told time and time again that we should not suggest any reforms in local government until we read the report of the Royal Commission. Yet we have before us in this Bill a very substantial change in the powers of local authorities which ought to be judged in the light of what the Royal Commission says about combining small authorities into larger ones and the various tiers which will then be recommended.
859 As the hon. Member for Bethnal Green has said, a local authority derives all its powers from Statute. Some local authorities may perhaps turn to Royal Charter for some of their powers but, generally speaking, a local authority is the creature of an Act of Parliament and its powers are created by Act of Parliament. This was stressed by the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman). Parliament has been careful, when giving powers to local authorities, either by Public Bill or Private Bill, to give no greater powers than are necessary for the execution of their proper duties.
I want, first, to consider the duties to which the powers in the Bill would be supplementary or ancillary. I do not think that the hon. Member for Bethnal Green puts forward the Bill as containing a main objective of a local authority. It seeks to assist local authorities in their main duties and in the responsibilities which they have. I do not think that he would suggest that, in future, it is to be a main duty of local authorities to set up a distributive service.
What main objectives, is it said, the Bill would help? It would help in building, I suppose—in the powers of local authorities to build houses, schools, libraries, municipal offices, and so on. It would help in education supplies, as my hon. Friend the Member for Honiton (Mr. Emery) explained. It would help with roads, as my hon. and gallant Friend the Member for Eye mentioned. These seem to be the sort of main functions of the local authorities which the Bill seeks to help. But are these ancillary powers of distributing goods, and so on, necessary for these functions? Will they improve them? Will they benefit the ratepayer and those for whom the local authorities are responsible?
I support my right hon. Friend the Member for Ashford, who said that there is not much spare capacity in local authorities as set up at present to undertake any further functions of this sort. This Bill would involve new activities. It would not be a reduction of activities by merger. That would not happen. We know Parkinson's Law too well to believe that there would be a reduction of activities when giving local authorities new functions to undertake.
860 What is relevant is that, when a local authority has asked for this sort of power by Private Bill, it has had to justify the necessity for it in its own area. Liverpool, Manchester and London have all had to come to this House—London, perhaps, with something in the nature of a Private Bill but a Public Bill—and they have all had to justify the necessity for this sort of power in their own areas. That is why I do not think that we can draw any conclusion from Private Bills which have given some of these powers to local authorities already. The Bill seeks to give the powers indiscriminately to all local authorities.
In considering whether this is necessary for all local authorities, I recall the words of my hon. Friend the Member for Gains-borough (Mr. Kimball). He has in his constituency, commercial undertakings which give very good service at efficient prices already. Is it not possible to get service—distribution, warehousing and so on— from the existing commercial undertakings? Commercial undertakings take the risk of new trends, of changes in fashion, which on occasion have proved bulk purchase to have been a terrible error.
The profit margin for commercial undertakings is an insurance against that type of error. Against goods the price of which contains a profit margin, of course non-profit trading looks very good at the time one does it. As the hon. Member for Ilford, South (Mr. Arnold Shaw) said, they were getting similar goods at a lower price. But then we would get the unwanted baths of my right hon. Friend the Member for Ashford, or some other item which had been accumulated by bulk purchase and found not to be required. It is the ratepayer, as my hon. Friend the Member for Poole (Mr. Murton) said, who foots the bill in cases like that.
The hon. Member for Liverpool, Walton (Mr. Heffer) said that there were many bankruptcies among small builders. Indeed there are; bankruptcy is the penalty for inefficiency. But inefficiency by local authorities does not receive its commercial punishment. It is merely paid for by the ratepayers and this is the difference between trading by commercial undertakings and trading by municipal undertakings.
861 If this sort of trading is not absolutely necessary to the duties and responsibilities of local authorities as at present, let us see whether it would be advantageous, or beneficial, or convenient in some way. My right hon. Friend the Member for Harrogate (Mr. Ramsden) said that many claims of savings resulting from bulk purchase were fallacious. We have been; given examples of vast savings and I would admit that frequently there are immediate savings and there is the possibility of buying similar goods at lower prices because of buying in bulk, but there is a great risk of vast losses in bulk buying of this sort.
If the goods are to be used at once then the consortia under the present law can cop. By "present consortia" I mean those cases where local authorities have banded together to get a common quotation and have then ordered their own goods on the basis of that common quotation. That is permitted by the law. it can get standardisation which can provide the advantage of bulk purchase without storage. All the Bill would do would be to give greater power to buy for stock, and that is where the risk arises and where the possibility of grave loss comes. My hon. Friend the Member for North Fylde (Mr. Clegg) has just commented on the cost of storing and warehousing and my hon. Friend the Member for Folkestone and Hythe made it very plain. The present law is a safeguard against that sort of risk.
I had hoped that during the debate—and perhaps the Parliamentary Secretary can fill in this gap—we would have had a little more indication of the goods and services which could be supplied by one master local authority for those who joined in and purchased goods from that master local authority. The hon. Member for Bethnal Green mentioned oil; the hon. Member for Willesden, West (Mr. Pavitt) mentioned petrol and hospital gardens and there were also references to educational supplies, vehicles and plant. All these things can be arranged perfectly simply under the existing law without any risk of great loss.
A question which occurs to me, however, is what competition there would be among various local authorities trading as builders' merchants. I draw an example from my own constituency. I am sure that given these powers my own Borough of Crosby would like to set up 862 and stock a builders' merchants to supply small urban districts and other such authorities in the area, but I am certain, too, that the County Borough of Bootle, "across the border", would like to do the same. Between them is the urban district of Litherland and both Crosby and Bootle have always coveted Litherland and would try to supply it from both quarters, and so we would have ridiculous competition between two authorities.
We were told that the Bill might clear up the doubts of local authorities. If the existing law is in doubt, let us have a Bill to declare what it is; we do not not need a Bill to extend powers in this way. We were told that it might provide trained personnel and staff for local authorities, but this can happen with the consortium. My hon. Friend the Member for Maidstone (Mr. John Wells) showed that Kent County Council is doing this very well under existing law, with expert staff. We were also told that the Bill might improve stock control and turnover. This is where the great risk comes.
The hon. Member for Bethnal Green based a great deal of his argument on organisation of demand. It is a phrase which sounds rather like "you take it and like it." As my right hon. Friend the Member for Harrogate said, the Bill does not organise demand. It may endeavour to organise supply, but it does not organise demand, whatever that phrase may mean. To say that one can only organise demand in the public sector seems an extraordinary argument. I know that it is stated in some report, but I cannot accept this. One organises demand by supplying the right thing. By that service, one gets on to mass production.
§ Mr. Gibson-Watt
Would my hon. Friend not agree, on the point about organising demand, that this will always be technically impossible, because we will never be able to organise family planning?
§ Mr. Page
That may be, and I am obliged for the comment.
There were two devastating proofs in the speech of my hon. Friend the Member for Folkestone and Hythe. One was the great value to the House of hon. Members who were described a few days 863 ago by the Leader of the House as "amateur" Members because they had jobs elsewhere. Here, in his speech, we had the very great advantage of the knowledge which such an hon. Member can bring to a debate of this sort. I pay tribute too, to my hon. Friend the Member for Honiton, whose knowledge came from his directorship of the Institute of Purchasing and Supply.
The second great thing in the speech of my hon. Friend the Member for Folkestone and Hythe was the fact that his firm gave up central purchasing ten years ago and adopted the consortia method, that is getting a common quotation but not buying in bulk. That obtains a measure of standardisation through the common quotation.
Standardisation will not necessarily be achieved by this Bill, nor is the Bill necessary to achieve it. It has been achieved by the consortium method, which is within the law and which avoids all the risks of bulk purchase. This is encouraged by the National Building Agency, the British Standards Institution and all the industrialised building systems. We ought to pause before we say that we want standardisation in every respect. As my hon. and gallant Friend the Member for Eye said, we are not so sure that standardisation is always efficient or progressive. The result may be inertia, once one gets a combination of local authorities obtaining standardised supplies in this way. Who will break into that standardisation with new inventions, new suggestions, and new plans? We have to be very careful about this.
I am very doubtful whether we ought to extend the powers of local authorities in the terms of this Bill because of the grave risk involved. I am very doubtful whether we ought to alter the existing law, which gives all the necessary powers through the consortium method, and is a safeguard against the risks which I have mentioned.
§ 3.24 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington)
It might be convenient for the House if I followed the hon. Member for Crosby (Mr. Graham Page). I do so with some 864 trepidation, because this is a Private Member's Bill and this is Private Member's day. I will try to make my remarks as brief as possible. I first of all congratulate my hon. Friend the Member for Bethnal Green (Mr. Hilton) on his fortune in the Ballot and, even more so, on his prescience in having selected this Bill for debate. Whatever else happens, it has given rise to wide consideration of many aspects of local authority work of great importance.
We in the Ministry think that this is a useful Bill. It would help local authorities and would give them a facility which they have wanted for a considerable time. From all our investigations, it seemed to us, as I think it has seemed even to one hon. Member opposite, that it would result in considerable savings to local authorities and ratepayers. I am glad to report that the Bill, generally speaking, commands the support of the associations, and that is a very good basis on which to begin our discussions of its possible effect.
It would not be proper for me to intervene too strongly in a debate on what is, after all, a Private Member's Measure, but perhaps I can answer some of the questions of a more general character which may be of service to the House in coming to its decision.
I need not say very much about the general principles. If we reflect honestly and objectively, it is very difficult to suggest that large-scale operations, whether they relate to bulk purchase or to the sharing of services, do not normally result in quite considerable savings. I have been saved from discharging part of my task by the impressive figures given by the hon. Member for Honiton (Mr. Emery), who referred to a wide range of authorities with effective central purchasing departments in different parts of the country, none of them I think controlled at present by supporters of this side of the House—if that is a factor of importance. The hon. Gentleman's figures cannot be summarily dismissed.
Broadly, nearly all our investigations led us to the same conclusion. There have been references to Marks and Spencerad nauseam,but it is true in other spheres that, provided the apparatus for large-scale purchasing is available, it is bound to yield some dividend which is 865 helpful to the ratepayers as a whole. The logic of this is irrefutable.
It would perhaps be a rather sad reflection on the House of Commons if, in the second half of the twentieth century, when we have this knowledge about large-scale operations and investment which are a concomitant of the modern technological age, we said that local authorities which say that they want to use powers such as those in the Bill should not be able to have them. My hon. Friend the Member for Bethnal Green does not suggest that they should be forced to use the powers in the Bill. In view of the White Paper on Public Purchasing and Industrial Efficiency, Cmnd. 3291, which referred at the end to purchasing by other authorities, it would be a great pity if the House, without further investigation in Committee, denied the opportunity which the Bill provides for further consideration of this matter and the giving, perhaps, of some additional powers.
That brings me to the point which the lion. Member for Poole (Mr. Murton) made about whether the powers are necessary. The hon. Member for Crosby stated the position quite accurately. A local authority is a statutory corporation which derives its authority from a general Act—like the old Municipal Corporations Act or Local Government Acts—or special local Acts passed in respect of itself. If it attempts to perform any function for which there is not provision in the Statutes, or to serve people outside its area or to undertake any other activities, it can be open to challenge. That is why, when we had a discussion following the Report to which I referred, the possibility of local government cooperation was raised and we immediately came up against the fact that local author ties had found that they were open to challenge if they went beyond what the Statutes provided.
It may be asked why some of the things that have been done have not been challenged. The answer is that, in some cases, there are local Acts; for example, in respect of Nottingham and Kent. In other cases there are informal arrangements, but they are open to challenge and are very risky indeed. They are certainly nit to be encouraged.
The tight hon. Member for Ashford (Mr. Deedes) referred to consortia. in 866 the case of the Nottingham consortia, there was statutory provision for that, but in other cases such provisions do not, as a rule, touch the problem of bulk purchasing or the sharing of other services. Most consortia are concerned with either new design or new building, although there are considerable advantages to be gained from that. Often the best specialists can be employed to design schools and so on. Some saving may arise because if a group of schools is being planned, the components in them may be standard and the fact that a larger production line can be established may reduce costs. But the individual contracts and orders are placed by individual authorities, with the result that the advantages that would accrue as a result of this Measure cannot necessarily be attained.
I will give an example of how necessary it is to have this arrangement, unless we proceed, as the law now stands, by separate Acts when a local authority wishes to take the initiative. A good example is the case of computer hiring and services. If one thing can characterise our ideas and the spirit of the second half of the 20th century— the spirit of drive and efficiency— it is the computer. This type of equipment can result in an enormous saving in time and money. Some of the answers we get are indeed peculiar, although I think, in general, the programming is probably wrong. I will not delay the House by giving some examples.
Cumberland had to get powers under the Cumberland Act, 1964, because it could not provide for the sharing of computer services with other local authorities. It is absurd that this House and local authorities should have to waste time on special Acts when facilities of this sort already exist and which can give enormous advantages to the participating authorities.
§ Mr. Costain
As the Post Office is setting up a complete national computer service, is the Minister claiming that local authorities will not have power to use and hire that service?
§ Mr. Skeffington
I do not know whether it is particularly helpful to spend a great deal of time debating individual aspects. I merely gave the example of the Cumberland Act to show what is involved in 867 this issue. In that case, to use the facilities of such an expensive piece of equipment, special legislation had to be passed. I am pointing out that, whether it is computers, work study, operational research or anything else, it would be rather sad —and, in some respects, silly—if each one had to be the subject of special legislation on every occasion.
§ Mr. Murton
There is a major conflict here. Is the Minister able to say categorically that a county council is unable to allow the services of its computer to be used by one of its local authorities?
§ Mr. Skeffington
The position is as it was stated by the hon. Member for Crosby; that a local authority which undertakes functions or provides services which it is not empowered to provide is open to challenge. In this context I outlined the position of Cumberland and the need for special legislation.
I have dealt with the question of consortia, and I have dealt to some extent with the question of saving, and now I should like to put on record some figures in addition to the very impressive ones given by the hon. Member for Honiton. I have had these figures checked while the debate has been going on to make sure that they are accurate and quotable. Of a London borough buying its educational supplies from the G.L.C., it can be safely said that its saving is between 10 per cent. and 20 per cent. Take scientific equipment: I have figures for last year of £750,000, and there was roughly a £40,000 saving. If one takes the global sum of purchases now running at about £30 million by the G.L.C., the saving is between £5 million and £6 million.
These are savings which, in relation to the background which I have mentioned, it would be quite absurd to say that the local authorities should not have the opportunity to make, if they so desire to make arrangements on the common basis provided by the Bill.
That brings me to a point made by the hon. Gentleman the Member for Crosby and the hon. Gentleman the Member for Gainsborough (Mr. Kimball). Of course there are many contractors providing first-class services on a competitive basis. They can continue to do so, because it is only in the sort of case in which large scale organisation 868 can give economies that the local authorities, if they liked to take the opportunity of combination, would do so in order to get the good results. That is what my hon. Friend is saying in his Bill.
I really think it is quite a mistake to say that this modest Measure, if I may so call it, is some kind of frontal attack on private enterprise. It is not intended to be such, as I understand it, and I do not think it would have that effect.
Finally I would say with the hon. Member for Honiton, who made his position very clear: why should it be that the Opposition should want to deny the councils, even councils which are run by people who belong to their party, the right, if they so desire, to undertake these arrangements? I hope that this Bill will have a Second Reading. I do hope the House will not be Luddite about this. I hope it will realise that there is here an opportunity for a considerable public advancement if these arrangements can be made. I hope it will give the Bill a Second Reading.
§ 3.37 p.m.
§ Mr. James Allason (Hemel Hempstead)
I, too, would like to congratulate the hon. Member for Bethnal Green (Mr. Hilton) on producing this Bill. It is quite a small one, and I think he may have underestimated the interest which it would arouse in the House, and a great deal remains still to be said upon it. The local authorities have indicated that they support it. I do not think that particularly surprising, because it extends their powers—although there is a slight argument whether it does or not. We do not blame the local authorities for that, but surely the duty of this House is to check whether any increase in powers given to local authorities is properly given.
With that in view one wants to look at the four parts of the Bill, and there are parts which have not been discussed at all yet. The first part is the supply of goods; the second, the provision of personnel services; third, the use of plant; and fourth, the maintenance of buildings and the sharing arrangements between local authorities or public authorities.
As to the first, the supply of goods and materials, I find myself not quite understanding what is behind the Bill—whether this is a central purchasing agency or whether it is merely a little sharing 869 arrangement such as that which the hon. Member for Bethnal Green suggested: "We want six typewriters; may we add that on to your order?" That is the way he described it, but the way the Joint Parliamentary Secretary described it it sounded much more like a centralised purchasing agency. He said the bigger we get in purchasing the more efficient it is. That has been denied by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). He made it quite clear that there is a limit to the size of optimum purchasing.
We have had quoted to us the example of Government purchasing as being a wonderful way to save money. In considering that, we ought to decide whether we are discussing an item which might be described as an "in-and-outer" like stationery, where requirements are easily forecast and come in and go straight out. or something like building supplies where items may have to remain on shelves for a considerable time until required. It may be that a particular size of bath plug in stock w ill not be required for two years. As a result, if the central organisation has to hold it. it has to have huge stocks.
When the Government deal with these matters. we know the results, but at least they can be quantified to the extent that the overheads are paid by the taxpayer, anyway, and, if there are losses, they are written off. When one comes to consider local authority work, matters have to be looked into rather more carefully. As it is being done in direct competition with private enterprise, it is only fair that it: should be costed fairly carefully. If there is to be a choice between buying supplies from a builder's merchant or from a central buying agency, the costings should be accurate.
In fact, what happens is that, if one buys from a county council, the authority does not arrange for every postage stamp and telephone call in the department concerned to be carefully costed to it. Neither are the loan charges in respect of the costs of storing equipment likely to be charged to the appropriate department. Local authorities know that they get money constantly from the rates, and they hope to keep their balances fairly level. A builder's merchant, on the other hand, may have an immense overdraft which he has to carry. On the production side, in their ordnance factories the Government are very careful to ensure that they 870 behave fairly towards private enterprise and that all overheads are properly apportioned. I do not see how that is likely to happen with local authorities.
Turning to the provision of services, involving administrative, professional and technical personnel, we have heard nothing about this today. It is left to our imagination. The impression given is that it is a good thing, but I am not at all sure that it is. If there is a shortage of surveying staff in one local authority, is it desirable to go to another authority and rent them from it, or is it better to go to private enterprise where one is not detracting from the efficiency of another local authority but where people are on the spot who know the local area and can be of help? I should have thought that there was a requirement to prove the necessity here, and that seems to have been left out.
When we come to the third part, which is the use of vehicles, plant and apparatus. I am much more sympathetic. It seems to refer to items of equipment like car crushing machinery. The Minister is urging local authorities to get together and produce major schemes for car crushing. At the Civic Trust meeting on 27th October the Minister urged local authorities to create disposal centres for bulky rubbish. He said that they should "think big" and consider the possible advantages of linking with their neighbours in all aspects of public cleansing.
There are various methods of disposing of cars. There is a gigantic machine costing £1 million, which in a few seconds reduces a car to a small lump. It is capable of dealing with 400,000 cars a year. It uses 30 instead of 600 men. Obviously that is the type of machine the Minister was thinking about. If the Bill is required in order that that machine can be bought by a consortium of local authorities, it seems extraordinary that the Minister should be urging the authorities to do so. Was he assuming that the Bill would become law? I should have thought it should be possible to form a consortium for this purpose. If it is not, Government time should be taken to provide that power.
Another attractive plant has just been opened. It is a fragmentation machine. It not only deals with cars but with television sets, cookers, washing machines and that kind of thing. It fragments all 871 the metal down into easy bits which can be sorted. These gigantic plants cannot be of use to only one local authority. I am surprised if this Bill should be necessary to make these work.
A further problem in bulk disposal concerns old furniture. Old furniture is sitting about longing to be disposed of. Most farmers would welcome a proper disposal system for such furniture so that their ditches should not be littered with it. Now that we have the Civic Amenities Act let us hope that there will be a greater demand for disposal of old furniture. The estimate for London alone is 1½ million cubic yards a year. A machine is needed to deal with that problem, which concerns not only London but the whole country.
Computers are in wide and growing use. I am surprised if the Bill is necessary to see that they are properly used. It is not necessary always to buy a computer. They are very expensive. South Shields paid £91,000 for one, but Hounslow is renting a computer at the rate of £2,635 a month. I should have thought renting a computer would be the answer to this problem in view of the reorganisation of local government. I do not suggest that there is a perfect computer on the market, but if so, is this Bill necessary to provide a consortium to be set up to buy it? We have not had a satisfactory answer to that.
I come to the fourth subject, the maintenance of buildings by direct labour organisations. I admit that I feel thoroughly prejudiced about this. I have heard of many examples of a direct labour organisation being inefficient. I know there are plenty of occasions when they are efficient, but I regard them with suspicion and therefore I regard with suspicion any attempt to extend their use. What will be the situation about tendering?
To sum up, the Bill goes very wide of the little elements which the Joint Parliamentary Secretary indicated may be necessary. It is too wide to be acceptable to the House. We must decide whether it has been proved that there is a genuine need for the whole of the Bill. I suggest that it has not been proved.
§ 3.50 p.m.
§ Mr. Stephen Hastings (Mid-Bedfordshire)
I want to follow one aspect in particular of the most relevant speech of my hon. Friend the Member for Hemel Hempstead (Mr. Allason). It is ridiculous that a Measure like this is necessary merely to enable computer services to be used. This is putting the cart before the horse. It shows an ignorance of management techniques and what goes into management today which is inherent in a number of other aspects of the Bill. I take it that my hon. Friend has examples, as I have, of British industrial firms which have got into serious financial difficulty because they have committed precisely the mistake in regard to local government I believe will be brought about by the Bill.
I apologise to the hon. Member for Bethnal Green (Mr. Hilton) for having missed the first half of his speech, through no fault of my own. I congratulate him on his good fortune and on the technique he employed in that part of the speech which I had the benefit of hearing. His speech was in many respects convincing. I thought his manner admirable. I am sorry for him personally that the Bill has not, in spite of his efforts, met with more sympathy than it has, particularly from these benches.
My hon. Friend the Member for Hemel Hempstead was correct in saying that the subject matter of the Bill is far too important and far-reaching in its possible effects for the promoter of the Bill seriously to hope that it will be acceptable to the House as a Private Member's Bill. Because I knew that I should miss some of the debate, I was content, in spite of the fact that I had put my name forward to the Chair as wishing to speak, to listen to the arguments on either side and to make up my mind on the basis of them. As the afternoon has worn on, I have become more and more suspicious, to the point of being almost horrified, at the potential damage of the Bill.
The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) castigated my right hon. and hon. Friends for being suspicious. He asked us why we were so suspicious and so stick-in-the-mud. He asked whether it was merely because a Labour Member had introduced the Bill. Was it, 873 he asked, because it was in some way connected with a Labour Government?
I have to remind the hon. and learned Member for Stoke Newington and Hackney, North, and the hon. Member for Bethnal Green, that we on this side of the House see the implications of this Measure in the same light as we regard the terrifying implications of the Industrial Expansion Bill, and the enormous Transport Bill, for which we are to have only one day to debate its Second Reading. Written into nearly every page of this Measure is the threat of increased interference, this whole edifice of interference in industry, which the Government are steadily building up. I assure the hon. and learned Gentleman that he is correct. I can hardly remember a Measure which has been introduced by the Labour Government over the last three years which has not filled us with profound suspicion, all the more so because, each time we are suspicious, and oppose a Bill, our suspicions are confirmed by the result.
§ Mr. Jasper More (Ludlow)
Would not my hon. Friend agree that while we may be suspicious of Bills introduced by the Government, we may also be suspicious of Private Members' Bills, introduced on Private Members' day, on an important subject to deal with local government when, after all, we have a Ministry of Housing and Local Government?
§ Mr. Hastings
My hon. Friend is right. The point has been made both from this Dispatch Box, and by a number of my right hon. and hon. Friends.
This is a small Bill, consisting of two pages. It must have been discussed with Ministers. Surely the Government are aware of its implications. The Joint Parliamentary Secretary described this as a modest Measure. If he listened carefully to the speech of my hon. Friend the Member for Folkestone and Hythe (Mr. Costain),
§ and to the speeches of my hon. Friends who are well-informed on this subject, and know the industries concerned, how can he represent this Measure as being modest in any way? It is nothing of the kind.
§ Our objections to the Bill are based on its hidden implications. Nobody is quarrelling with the hon. Gentleman's objectives. Everybody wants them. He said that the Bill was appropriate in the present economic climate. He added that it would lead to greater efficiency. I cannot think of any example of official administration or local government administration, which rivals private management in either of these two categories. The hon. Gentleman ought to be aware that this is basically a management problem. If he is sincere, and I am sure he is, in his objective of wanting somehow to relieve this over-burdened—
§ Mr. Hastings
Mr. Speaker, I am grateful for your protection, and for enabling me to go on with my brief remarks on this important Measure.
I am putting a serious point to the hon. Gentleman. This is a management problem, and I must challenge right hon. and hon. Gentlemen opposite to produce even one example of real progress in this sphere in the public sector as opposed to the private one. Progress in management generally has been pioneered in the United States over the last 13 years.
§ Mr. George Wallace (Norwich, North) rose in his place and claimed to move,That the Question be now put.
§ Question put, That the Question be now put:—
§ The House divided:Ayes 67, Noes 34.875
|Division No. 24.]||AYES||[3.59 p.m.|
|Archer, Peter||Edwards, Robert (Bilston)||Heffer, Eric S.|
|Atkinson, Norman (Tottenham)||Ellis, John||Hilton, W. S.|
|Barnes, Michael||English, Michael||Howie, W.|
|Brown, Rt. Hn. George (Belper)||Ennals, David||Janner, Sir Barnett|
|Brown, R. W. (Shoreditch & F'bury)||Evans, loan L. (Birm'h'm, Yardley)||Jeger, Mrs. Lena(H'b'n&St.P'cras,S.)|
|Crossman, Rt. Hr. Richard||Fitch, Alan (Wigan)||Jenkins, Hugh (Putney)|
|de Freitas, Rt. Hn. Sir Geoffrey||Fraser, John (Norwood)||Jones, Rt. Hn. Sir Elwyn(W.Ham,S.)|
|Diamond, Rt. Hn, John||Freeson, Reginald||Judd, Frank|
|Dickens, James||Gardner, Tony||Kerr, Russell (Feltham)|
|Doig, Peter||Greenwood, Rt. Hn. Anthony||Lever, Harold (Cheetham)|
|Dunwoody, Dr. John (F'th & C'b'e)||Griffiths, Rt. Hn. James (Llanelly)||Lipton, Marcus|
|Lomas, Kenneth||Parkin, Ben (Paddington, N.)||Skeffington, Arthur|
|Lubbock, Eric||Pavitt, Laurence||Swingler, Stephen|
|Lyon, Alexander W. (York)||Perry, Ernest G. (Battersea, S.)||Taverne, Dick|
|MacColl, James||Rankin, John||Tomney, Frank|
|MacDermot, Niall||Richard, Ivor||Weitzman, David|
|MacPherson, Malcolm||Robinson, Rt. Hn. Kenneth(St.P'c'as)||Whitaker, Ben|
|Marks, Kenneth||Robinson, W. O. J. (Walth'stow, E.)||Williams, Alan Lee (Hornchurch)|
|Mendelson, J. J.||Rodgers, William (Stockton)||Winnick, David|
|Mikardo, Ian||Roebuck, Roy|
|Molloy, William||Rogers, George (Kensington, N.)||TELLERS FOR THE AYES:|
|Morris, Alfred (Wythenshawe)||Ryan, John||Mr. George Wallace and|
|Moyle, Roland||Shore, Peter (Stepney)||Mr. Arnold Shaw.|
|O'Malley, Brian||Srlkin, Rt. Hn. John (Deptford)|
|Allason, James (Hemel Hempstead)||Grieve, Percy||Pink, R. Bonner|
|Bell, Ronald||Gurden, Harold||Ridley, Hn. Nicholas|
|Black, Sir Cyril||Harrison, Col. Sir Harwood (Eye)||Russell, Sir Ronald|
|Body, Richard||Hastings, Stephen||Sinclair, Sir George|
|Braine, Bernard||Heald, Rt. Hn. Sir Lionel||Taylor, Frank (Moss Side)|
|Buck, Antony (Colchester)||Hunt, John||Weatherill, Bernard|
|Clegg, Walter||Kimball, Marcus||Wells, John (Maidstone)|
|Costain, A. P.||Lewis, Kenneth (Rutland)||Wood, Rt. Hn. Richard|
|Deedes, Rt. Hn. W. F. (Ashford)||MacArthur, Ian|
|Drayson, G. B.||More, Jasper||TELLERS FOR THE NOES:|
|Fortescue, Tim||Morrison, Charles (Devizes)||Mr. Charles Doughty and|
|Gibson-Watt, David||Neave, Airey||Mr. Oscar Murton.|
|Goodhart, Philip||Page, Graham (Crosby)||@@@|
§ Whereupon Mr. DEPUTY SPEAKER declared that the Question was not decided in the affirmative because it was not supported by the majority prescribed by Standing Order No. 32 (Majority for Closure).
§ It being after Four o'clock, the debate stood adjourned.
§ Debate to be resumed upon Friday, 26th January.